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a) Hi, could you explain the following? Thanks.
Para 29 of IAS 20 states that “Grants related to income are presented as part of profit or loss, either separately or under a general heading such as ‘Other income’; alternatively, they are deducted in reporting the related expense.”
How are the grants deducted in reporting the related expense? Could you give some examples for this?
b) Grant repayment is corrected in the current period, not retrospectively.
Q12 (Kaplan FR kit): Item D which states”Any required repayment of a government grant received in an earlier reporting period is treated as prior period adjustment.” is incorrect, as “any repayment is corrected in the current period, not retrospectively.”
I do not understand how this actually works. Besides grant repayments, are all other types of repayment only corrected in the current period?
Could you explain this and give some examples?
Thanks.
Hi,
a) So if the grant income is related to a wages/salaries through the creation of a certain number of jobs then the wages/salaries expense would be reduced.
b) If the grant is repaid then we account for the repayment now and do not go back and make any retrospective changes to the accounting treatment performed in previous years. We simply DR Deferred income CR Bank in the current year.
Thanks
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