Grants are not recognised until there is reasonable assurance that the conditions will be complied

with and the grant will be received.

ACCOUNTING TREATMENT

GRANTS RELATED TO INCOME

Grants relating to income are shown in profit or loss either separately or as part of other income or
alternatively deducted from the related expense.

Grants relating to assets

Government grants relating to assets are presented in the statement of financial position either

as deferred income or by the deducting the grant in calculating the carrying amount of the assets.

Any deferred credit is amortised to profit or loss over the assesses useful life.

Repayments of grants

A government grant which becomes repayable is account for as a change in accounting estimates in
accordance with IAS 8 accounting policies, changes in accounting estimates and errors.

Repayment of grants relating to income are applied first against any enammoratied deferred credit
and then in profit or loss.

Repayments of grants relating to assets are recorded by increasing the carrying amount or reducing
the differed income balance. Any resultant cumulative extra depreciation recognised in profit or loss
immediately

Example

Maddoc purchased a new item of plant for $800,000 on 1 january 20X2, and expected to use it for 5
years with a zero residual value. The Government awarded Maddoc a grant of $300,000 towards the
cost of the plant on the same date.

Maddoc treated the grant as deferred income and has a 30 june year end.

Required

How much is recognised in non-current liabilities in respect of the grant as at 30 June 20X2
IAS 8

IAS 8 accounting policies changes in

Each standard deals with

 Selection and application of accounting policies

 Changes in accounting policies
 Changes in accounting estimates
 Accounting for errors

ACCOUNTING POLICIES
Accounting policies are a specific principles, bases, conventions, rules and practices applied
by an entity in preparing and presenting the financial statements.
An entity determines its accounting policies by applying the appropriate IFRS. In the absence
of an IFRS applying in the area, management uses its judgment to develop and apply a policy
that results in information that is relevant and reliable as outlined in the conceptual
framework for financial reporting.
In making the judgment management also considers (in order of importance)
1. IFRS dealing in with similar issues
2. A definitions, recognition criteria and measurement concepts outlined in the
conceptual framework
3. The most recent pronouncements of other standard setting bodies that use a similar
conceptual framework or accepted industry practice

CHANGES IN ACCOUNTING POLICIES

A change in accounting policy only if
A. It is required by an IFRS.
B. It results in the financial statements providing reliable and more relevant
information about the effects of the transaction of the other affects