Page 221 - F1 Integrated Workbook STUDENT 2018

IAS 20 Government Grants and IAS 40 Investment Properties

1.6 Repayment of government grants

In some cases grants may need to be repaid if the conditions of the grant are
breached. For example, the grant was given to produce 100 extra jobs in two years
and this doesn't happen.

Revenue grants:

 Reduce deferred income, if any, and recognise the balance of the repayment
immediately as an expense.

Capital grants:

 Netting off method – increase the carrying value of the asset by the repayment
amount and recognise any cumulative depreciation that should have been
charged to the statement of profit or loss or

 Deferred income method – reduce deferred income and recognise any balance
of repayment to the statement of profit or loss immediately as an expense.

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