Question

government grant

Topic: Enterpreneurship

Question: what is a government grant?

Answer 1

Answer) A government grant is a cash prize awarded by a federal, state, or local government authority for a beneficial project of some kind. It is an effective gift: it don't include technical assistance or other financial assistance, such as loans or loan guarantees, interest support, direct allocation or income sharing. The beneficiary is not expected to repay the funds.

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance deals with Governement grants related accounting and its presentation.

Accounting -

A government grant is recognized only when there is reasonable assurance that (a) the entity will meet the conditions associated with the grant and (b) the grant will be received.

The grant is recognized as income over the period necessary to offset it with related costs, which it aims to offset in a systematic way.

Generally, non-cash grants, such as land or other resources, are calculated at fair value, although both the asset and the grant are also allowed to be recorded at a nominal amount.

Even if there are no conditions associated with assistance that specifically relate to the entity's operational activities (other than requirements for operating in specific industrial areas or sectors), these grants should not be restricted to property rights.

The grant due as compensation for costs actually incurred or for immediate financial support, with no related costs in the future, must be recognized as revenue in the period in which it is due.

Diclosure-

The following must be disclosed:

• accounting policy adopted for grants, with balance sheet presentation ways.
• nature and extent of grants recognised in the FS
• unfulfilled conditions and contingencies attaching to recognised grants