Wiley International Trends in Financial Reporting under IFRS: Including Comparisons with US GAAP, Chinese GAAP, and Indian GAAP

CHAPTER 9

ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE (IAS 20)

1. OBJECTIVE

1.1 This Standard deals with the accounting for, and in the disclosure of government grants and in the disclosure of other forms of government assistance.

1.2 The Standard does not deal with

• Special problems that arise due to reflecting the effects of changing prices on financial statements or similar supplementary information
• Government assistance provided in the form of tax benefits (including income tax holidays, investment tax credits, accelerated depreciation allowances, and concessions in tax rates)
• Government participation in the ownership of the entity
• Government grants covered by International Accounting Standard (IAS) 41, Agriculture.

2. SYNOPSIS OF THE STANDARD

A summary of this Standard and its key terms is presented next.

2.1 Government grants, including nonmonetary grants, should be measured at fair value.

2.1.1 Government grants are government assistance in the form of transfers of resources by a government to an entity in return for the entity’s past or future compliance with certain conditions relating to the entity’s operating activities. This does not include those forms of government assistance that cannot reasonably be valued and those transactions with the government that cannot be distinguished from other normal trading transactions of the entity.

2.1.2 Government refers to a government, government agencies, and similar bodies, whether local, national, ...