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IAS 20 Government Grants and Disclosure of Government Assistance

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance sets out the accounting for, and the disclosure of, government grants and the disclosure of other forms of government assistance. Published April 1983. Effective 1 January 1984.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Synopsis

  • Government grants are recognised only where it is reasonably certain that an entity will comply with conditions attached to the grant.
  • Grants are recognised as income over the period necessary to match them with related costs for which they are intended to compensate. Grants are not recognised in equity.
  • A grant receivable as compensation for expenses already incurred is recognised as income when it becomes receivable.
  • A grant related to assets is presented in the statement of financial position either as deferred income or as a deduction from the carrying value of the related asset.
  • A grant related to income may be presented as an item of income or deducted in reporting the related expense.
  • Where grants become repayable, they are treated as a change in estimate.

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The following interpretations refer to IAS 20

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

Where an entity applies FRS 101, it is preparing Companies Act accounts rather than IAS accounts. Therefore the following amendments must be made to IAS 20 in order to achieve compliance with the Companies Act and related Regulations:

  1. A government grant related to an asset may not be deducted in arriving at the carrying amount of the asset; instead the grant must be recognised as deferred income and recognised in profit or loss over the useful life of the asset.
  2. A government grant related to income may not be deducted from the related expense; instead it is presented as income within profit or loss.

Disclosure exemptions

There are no disclosure exemptions from IAS 20 for a qualifying entity.

This page was last updated 4 February 2022.