Repayment of a government grant
For an income-related grant, first apply repayment against any unamortised deferred credit for the grant; recognise any excess immediately in profit or loss. For an asset-related grant, increase the asset’s carrying amount or reduce deferred income as appropriate, and recognise immediately the cumulative additional depreciation that would have been recorded without the grant. Apply the exact facts and presentation method.
Worked example
A company must repay $12,000 of an income-related grant and has an unamortised deferred credit of $8,000 for it. It reduces the deferred credit by $8,000 and recognises the remaining $4,000 immediately in profit or loss.
Common mistake
Restating all prior financial statements as though the grant had never existed, or overlooking the deferred credit when measuring the immediate expense.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |
