CHAPTER 18: SUMMARY

 Government grants are recognized when there is reasonable assurance that (a) the attached
conditions will be satisfied and (b) the grants will be received. The mere receipt of a grant is not
conclusive evidence of the satisfaction of the attached conditions.
 A government grant is recognized as income as the related expense for which the grant was
intended to compensate is incurred. (MATCHING – ‘no expense, no income’)
 A grant related to a depreciable asset is recognized as income as the asset is depreciated.
 A grant related to non-depreciable asst(land) is recognized as income as the depreciable asset
built on the land id depreciated.
 A grant received as compensation for expenses already incurred or as immediate financial
support is recognized immediately as income.
 Grants related to assets are grants conditioned on the acquisition of long-term assets. Other
grants conditioned grants related to income.
 Grants are measured at fair value. Alternatively, non-monetary grants may be measured at
nominal amount.
 Grants are presented in the financial statement (except statement of cash flows) either by gross
presentation or net presentation.
 Forgivable loans and the benefit of loans at below-market interest rate are considered
government grants.
 The repayment of a government grant is accounted for prospectively.
 The following are not government grants:
(1) Tax benefits
(2) Free technical or marketing advice,
(3) Provision of guarantees
(4) Government procurement policy that is responsible for a portion of the entity’s sales and
(5) Public improvements that benefit the entire community.