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PAS 20 Government Grants Module 16

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Questions and Answers

How can a government grant related to an asset be presented in the statement of financial position?

Only by setting the grant as deferred income
Either by setting the grant as deferred income or by deducting the grant from the carrying amount of the asset (correct)
By adding the grant to the revenue
Only by deducting the grant from the carrying amount of the asset

What is a government grant?

Assistance by government in the form of transfer of resources to an entity (correct)
A loan from the government to an entity
A tax exemption given to an entity by the government
A fine imposed by the government on an entity

What is the presentation of government grant related to income in the income statement?

It is presented as a separate revenue or under other income (correct)
It is presented as a reduction of the related expense
It is not presented in the income statement
It is presented as an asset in the balance sheet

When can a government grant be recognized?

When there is reasonable assurance that the entity will comply with the conditions of the grant and the grant will be received (C) Signup and view all the answers

What is not included in government assistance?

Infrastructure in development areas (A) Signup and view all the answers

How should a government grant be accounted for?

As income on a systematic basis over the periods in which the related costs are incurred (B) Signup and view all the answers

How should a government grant related to a non-depreciable asset be recognized?

As income over the periods which bear the cost of meeting the conditions (B) Signup and view all the answers

What is the purpose of government assistance?

To provide an economic benefit specific to any entity or range of entities qualifying under certain circumstances (C) Signup and view all the answers

What is required to be disclosed about government grants?

Both the accounting policy adopted and the nature and extent of government grants recognized (C) Signup and view all the answers

How should a government grant received as compensation for expenses or losses already incurred be recognized?

As income in the period it is received (C) Signup and view all the answers