government grants

This topic has 3 replies, 2 voices, and was last updated 10 years ago by MikeLittle.

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November 27, 2015 at 7:14 am #285628
sasha
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In july 2002, there was a Grant of CU 10 000 to cover the expenses for ecological measures during 20X2 – 20X5. ABC assumes to spend CU 3 000 in 20X2-20X4 and CU 2 000 in 20X5 (CU 14 000 in total).
sir do we have to capitalize the grant 10000 in SOFP? I could not get how to account this amount in financial statements..
November 27, 2015 at 10:17 am #285667
MikeLittle
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How do you get to $14,000? (3 x $3,000) + (1 x $2,000) does not come to $14,000!
I would credit $10,000 to a deferred income account and then spread over the next four years on a pro-rata basis
November 29, 2015 at 11:39 am #286110
sasha
Member
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sir why government grants are called liability? do we have to pay back to government?
November 29, 2015 at 9:55 pm #286224
MikeLittle
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We may need to – it depends upon any conditions applicable to the grant award. It may be that it’s unconditional or it may be that we need to continue to satisfy the grant conditions and, if we don’t, we need to repay the grant
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