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Hello sir, hope you r well.
When evaluating audit risk in Hodges Co.it says in the answer that the grant should be recognised when conditions r met. If not,then a provision should be recognised in line with IAS 37.
I dont understand the link with IAS 37. Can u pls elaborate. Thank you.
If we have received the cash (in advance of the conditions being met) then that grant is potentially repayable … because we may not meet the conditions
After much searching I eventually found the question and, after much more searching, I found the printed solution
Here’s an extract from the solution:
“If Hodges Ltd fails to meet the environmental targets, the grant may have to be repaid, partly or in full. If this is the case, a provision should be recognised for the potential repayment (or a note should disclose a contingent liability in the case of a possible repayment)”
Where is the problem with that?
What i quoted earlier was the answer from BPP kit,hence it was not clear. But the extract you quoted is mch clearer.
Sorry for the trouble of searching the question n answer. Thank you sir.
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