Page 10 - PowerPoint Presentation

GOVERNMENT GRANTS AND GOVERNMENT ASSISTANCE

Grants related to loans

• Loans received from a government at a below-market

interest rate should be recognised in accordance with IAS 39
(Financial instruments: Recognition and measurement).

• The loan is measured at fair value and the difference
between the initial carrying amount of the loan (fair value)

and the loan proceeds received from the government is the

benefit received and is treated as a government grant.

• If the loan is in respect of an asset acquired, the benefit

should be accounted for in one of the two ways as described
under asset-based grants, depending on the entity's

accounting policy.

• If the loan relates to income, it should be accounted for as
other income, or as a deduction from the related expense as

with any other income-based grant.

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