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International Accounting Standard (IAS) 20
Accounting for Government Grants
and Disclosure of Government Assistance

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International Accounting Standard (IAS) 20

IAS 20

Accounting for Government Grants and Disclosure of Government Assistance

Issued in April 1983

Reformatted in 1994

Recent amendment: by IAS 1 revised in September 2007

To recognise government grants
   --> reasonable assurance of the following items is required,
         (1) compliance with the conditions attached
         (2) receipt of the grants

A forgivable loan
   --> treated as a government grant
   --> if the following is reasonably assured
         (1) the terms for forgiveness of the loan will be met

If a government grant is recognised,
--> IAS 37 applies to related contingent liability and contingent asset

Government grants
--> not credited to shareholders' interest directly
--> capital approach is not used

Government grants
   --> recognised as income (over the periods)
   --> as they match with related costs
   --> income approach is used

Government grants related to income
--> presented as a credit
--> in the statement of comprehensive income

Government grants related to assets
   --> two acceptable alternatives

         (1) report as deferred income
               --> deferred income is recognised as income
                     (over the life of asset)

         (2) deduct from the carrying amount of asset
               --> recognised as income
               --> through a reduced depreciation charge
                     (over the life of asset)

IAS 20 Technical Notes