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Given Q] Which TWO of the following statements about accounting for government grants are true?
(A) A government grant related to the purchase of an asset must be deducted from the carrying amount of the asset in the statement of financial position
(B) A government grant related to the purchase of an asset should be recognised in profit or loss over the life of the asset
(C) Free marketing advice provided by a government department is excluded from the definition of government grants
(D) Any required repayment of a government grant received in an earlier reporting period is treated as prior period adjustmentGiven Ans] (B) & (C)
MY QUESTION=> Isn’t option (A) also true, since we do that when using the net method?
Also, please explain the right statement in regards to option (D).I think the ‘must’ here is incorrect.
Had it been worded as ‘may’ it would have been correct.
Hope this helps 🙂
Hi,
It is not (A) as we have the option to net-off or show as deferred income.
It is not (D) as any repayment is deducted from deferred income and if there is none remaining then it is taken through profit or loss with the reason being that we have estimated the government grant figures and so we would be looking at a change in accounting estimate.
Thanks
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