FR - Government Grant

Question 1

Explain what a government grant is?

Answer 1

A government grant is where the assistance is given to the entity by the government in the form of transfer of resources

Question 2

Where in the Handbook can you find Government Grant for IFRS and ASPE

Answer 2

IFRS - IAS 20
ASPE 3800

Question 3

What are the two types of grants

Answer 3

1. Grants related to income
2. Grants related to assets

Question 4

What are the two criteria for when recognition can be made for a government grant

Answer 4

1. The entity will comply with the condition attached to the grant
2. The grant will be received

• Receipt of a grant does provide evidence that the condition of the grant has been fulfilled
• Grant is recognized at fair value incurred in the previous period if received

Question 5

Explain the accounting for grants related to income

Answer 5

• It is the one that provides resources to cover expenses, such as grants, salaries & wages
• Grants can also be deducted from related expenses, according to net method
  Dr. Cash
  Cr. Grant revenue

Question 6

Explain the accounting for grants related to assets

Answer 6

• Provides resources to cover the purchase of an asset such as a grant to purchase a piece of equipment
• Is recognized as income over the period necessary to match it with a related cost for which it is
• Recognize as systematic basis over the useful life of the asset for the grant

Question 7

Explain what government loans are?

Answer 7

-If grant loans are forgiven, government loans is treated as government grant
-Government loans may also be provided where the loan is repayable, and can also care interest terms

Question 8

Explain what non-monetary grants are

Answer 8

• Grants related to income and grant related to asset may be NMT in nature
• once the value is determined, recognition follows the same criteria.

Question 9

When does the derecognition occur

Answer 9

1. Grant amount has entirely recognized in income a statement of OCI
2. Grant becomes repayable or is repaid, as the entity did not meet the terms of grant

Question 10

What is needed for the presentation and disclosure - related to income & for asset

Answer 10

Income
Gross method - separately as “other income”
Net Method - Deducted from the related expenses (credit to expense account)

Asset
Gross method - as deferred income (A liability) brought into income over the useful life of asset
Net method - deducted from asset carrying value

Question 11

Provide the difference between IFRS and ASPE

Answer 11

Under ASPE 3800 - does not require accumulated adjustment for depreciation
NMT grant recorded at FV, no option is recorded at a nominal amount