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A government grant related to the purchase of an asset should be recognised in profit
or loss over the life of the asset.
Teacher, Is this statement correct?
I do opt not to recognise in sopl rather to reduce the value of the asset. don’t I?
Here it says should be not must be. is this the catch?
please explain.Hi,
There is a choice of treatment per the standard. You can either recognise it as deferred income and release the deferred income over the life of the asset. The alternative is to net the grant income against the cost of the asset and then depreciate the net cost of the asset over its useful life.
The common treatment seen in company accounts is that of the first choice using the deferred income approach.
Thanks
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