Chapter 33 Government Grants

Question 1

When do you measure a government grant

Answer 1

You add a government grant to income as the expense takes place

Question 2

How do you recognize a government grant:

1. When grant is received prior to conditions being met
   2, If condition has been met but grant is not received
2. When condition is met and grant is received

Answer 2

1. Deferred government grant liability
2. Government grant receivable
3. Government grant revenue

Question 3

How are monetary government grants initially measured?

Answer 3

They are initially measured at fair value

Question 4

How are grants related to assets measured?

Answer 4

They are measured right when the expense takes place for the asset (usually in line with depreciation). For non depreciable assets such as land, grant measured when obligations of grant are fulfilled.

Question 5

How are monetary government grants subequently measured?

Answer 5

Original grant amount less cumulative amount recognized as income in statement of comprehensive income

Question 6

How are government loans treated if they have favourable interest terms?

Answer 6

Take the difference between the loan received and the PV of the loan amount using the effective interest method. DO EXAMPLE 33.2E FOR MORE INFORMATION.

Question 7

How are non-monetary government grants initially measured?

Answer 7

Fair value OR nominal amount

Question 8

What are the differences between IFRS and ASPE for government grants?

Answer 8

Under IFRS you can measure a grant as a nominal or FV amount. Under ASPE you have to measure it as FV.