UK GAAP 2019

Chapter 21Government grants

• 1 INTRODUCTION
• 2 COMPARISON BETWEEN SECTION 24 AND IFRS
  • 2.1 Recognition
  • 2.2 Measurement
  • 2.3 Presentation
• 3 REQUIREMENTS OF SECTION 24 FOR GOVERNMENT GRANTS
  • 3.1 Terms used in Section 24
  • 3.2 Scope
    • 3.2.1 Investment tax credits
  • 3.3 Recognition and measurement
    • 3.3.1 General conditions for recognition
    • 3.3.2 Measurement
    • 3.3.3 Basis of recognition in income
  • 3.4 The performance model
  • 3.5 The accrual model
    • 3.5.1 Grants relating to revenue
    • 3.5.2 Grants relating to assets
  • 3.6 Repayment of government grants
  • 3.7 Presentation
  • 3.8 Disclosure requirements
• 4 SUMMARY OF GAAP DIFFERENCES

List of examples

• Example 21.1: UK research and development expenditure credit (RDEC)
• Example 21.2: Illustration of RDEC credit consequences on current tax liability
• Example 21.3: Grant towards a fixed asset – the performance model

Chapter 21Government grants

1 INTRODUCTION

Government grants typically involve a transfer of resources by a government body to an entity to support specified activities or projects. The transfer of funds is usually dependent on past or future compliance with certain conditions relating to the entity's operating activities. The exact nature of the support varies over time as governments and their priorities change.

The main accounting issue that arises from government grants is how to deal with the benefit that the grant represents in the profit and loss account. Section 24 – Government Grants – gives an accounting policy choice over one ...