How do I account for government grants under IFRS?

There are two broad approaches to the accounting for government grants: the capital approach, under which a grant is recognised outside profit or loss, and the income approach, under which a grant is recognised in profit or loss over one or more periods.

How do I account for repayment of government grants?

Repayment of a grant related to income shall be applied first against any unamortised deferred credit recognised in respect of the grant. To the extent that the repayment exceeds any such deferred credit, or when no deferred credit exists, the repayment shall be recognised immediately in profit or loss.

Is accounting a 20 standard?

The objective of IAS 20 is to prescribe the accounting for, and disclosure of, government grants and other forms of government assistance.

What are the IAS 20 government grants?

IAS 20 defines a government grant as a transfer of resources in return for past or future compliance with certain conditions relating to the operating activities of the company.

How are government grants shown on financial statements?

Government grants related to specific fixed assets should be presented in the balance sheet by showing the grant as a deduction from the gross value of the assets concerned in arriving at their book value.

Are government subsidies taxable?

Therefore, all sorts of subsidy received by an assessee from the specified persons, irrespective of its nature as capital or revenue shall be taxable as income of the assessee unless the same falls in the exclusion category.

Is government grant considered revenue?

– Grant/payout is taxable if it’s given to supplement trading receipts or to defray operating expenses of the company. The grant/payout is revenue in nature. – Grant/payout is non-taxable if it’s given for the purpose of acquiring capital asset of the company. The grant/payout is capital in nature.

Is grant income Other income?

Treat as ‘other income’; in which case grant will be a credit to the income statement and to reported separately from related expense. Taking the same example is above, 150 million of research expense will be recorded whereas 30 million will be reported on the face of income statement as “other income”.

How do you determine grant income?

A grant is recognised in income when the grant proceeds are received (or receivable) provided that the terms of the grant do not impose future performance-related conditions*.

What is revenue grant?

Grants which relate to revenue are credited to the profit and loss account as ‘Other Income’. They can also be deducted from the related expenses in the profit and loss account.

Which of the following statements about IAS 20 accounting for government grants and Disclosure of government Assistance are true?

The correct answer is C and D as IAS 20 Accounting for Government Grants and Disclosure of Government Assistance allows for two alternative presentations of grants related to income – either separately or under a heading such as ‘Other income’ (option C) or they can be deducted from the related expense (option D).

Are grants treated as income?

In most instances, grant funds are counted as taxable income on your federal tax return. This means that you will be required to pay taxes on these funds.