In IFRS, if you work for an organization. If you were to recieve a grant from...

In IFRS, if you work for an organization. If you were to recieve a grant from the government to host an event. How would you report it under IAS-20? Would you present it in the " presentation of grants related to assets" or " presentation of grants related to income" How would you report this expenditure? Under an Asset or an Expense?

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Expert Solution

A government grant is recognised only when there is reasonable assurance that (a) the entity will comply with any conditions attached to the grant and (b) the grant will be received.

A grant receivable as compensation for costs already incurred or for immediate financial support, with no future related costs, should be recognised as income in the period in which it is receivable. The Grant recieved for hosting an event is a grant for compansation of cost or related to expense.

The reason to not to present this as grant related to asset is in the definition. The definition is:

'Grant related to assets are government grants whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long term asset. Subsidary conditions may also be attached restriciting the type or location of the assets or the periods during which they are to be acquired or hold.'

So as per the definition there is no asset acquiring, constructing or purchasing activity incurred. Therefore this is not considered as grant related to assets.

'Grant related to income are government grants other than those related to assets.'

So, it is now cleat that this should be Present as "Grant related to income".

This should be reported as expenditure. Because to report as an asset we should have an asset for which grant is recieved.

ekkarill92 answered 1 year ago

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