Grant for a non-depreciable asset
IAS 20 requires recognition of grant income on a systematic basis over the periods in which the entity recognises the costs intended to be compensated. A grant of non-depreciable land may require fulfilment of conditions that cause expenses over several periods; recognise the grant over the periods bearing those costs. Assess the grant’s terms and reasonable assurance rather than assuming that non-depreciation alone determines immediate recognition.
Worked example
A government gives land to an entity on condition that it constructs a building. If the facts support recognising the grant over the building’s useful life as related costs are expensed, grant income follows that period rather than arising solely when the land is received.
Common mistake
Concluding that a grant must always be recognised immediately because the related land is not depreciated, without analysing its conditions and related costs.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |