There are situations when a company may receive grants to help them set up their operations (for example, in a deprived area to encourage employment opportunities) or to receive grants to help them with day-to-day expenditure (such as new start-up grants) or help with the cost of assets.
Section 24 Government Grants of FRS 102 deals with the accounting and disclosure requirements for grants and whilst some of the concepts are largely the same as the previous UK GAAP in SSAP 4 Accounting for Government Grants, FRS 102 introduces a new ‘performance model’, which was not previously seen in the old SSAP 4.
Section 24 itself is a fairly short section and, for the purposes of this section, a government grant is assistance provided by the government in the form of resources (for example, cash) and in return for which the entity has to comply with certain, past or future, conditions that relate to the entity's operative activities.
Section 24 does not deal with government assistance provided to an entity in the form of benefits that are available in determining taxable profit (or loss) or are determined or limited on the basis of income tax liability. For the purposes of Section 24, government assistance is action that is provided by the government and is designed to provide an economic benefit to an entity (or ...