Page 215 - F1 Integrated Workbook STUDENT 2018

IAS 20 Government Grants and IAS 40 Investment Properties

IAS 20 Government Grants

1.1 Introduction

Governments often provide money or incentives to companies to export to or
promote local employment.

Government grants could be:

 revenue grants, e.g. money towards wages

 capital grants, e.g. money towards the purchase of non-current assets.

1.2 General principles

IAS 20 Government Grants follows two general principles when determining the
treatment of grants:

Prudence: grants should not be recognised until the conditions for receipt have been
complied with and there is reasonable assurance the grant will be received.

Accruals: grants should be matched with the expenditure towards which they were
intended to contribute.

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