PAS 20

Accounting for Government

Grants and Disclosure of
Government Assistance

OBJECTIVE AND SCOPE

Non-monetary Grants
PAS 20 applied in accounting for, and in the
The assets and related income or liability from
disclosure of, government grants and in the non-monetary assets shall be measured:
disclosure of other forms of government assistance. - usually at the FV of the asset received
PAS 20 does not deal with: - sometimes at nominal amount
● Special problems arising in accounting for
government grants reflecting the effects of
TYPES OF GOVERNMENT GRANTS AND
changing prices or in supplementary
PRESENTATION
information.
Grants related to Asset
● Government assistance that is provided for
● the condition is that the entity qualifying for
an entity in the form of income tax-related
the grant should purchase, construct or
benefits.
acquire long-term assets.
● Government participation in the ownership
● shall be presented in the statement of
of the entity.
financial position either by:
● Government grants related to biological
- setting up the grant as deferred
assets.
income
- deducting the grant in arriving at
NATURE
the carrying amount of the asset
Government grants are assistance by the
Grants related to Income
government in the form of transfers of resources to
● grants other than those related to assets.
an entity in return for past or future compliance with
● presented as part of profit or loss, either:
certain conditions relating to the operating activities
- separately or under a general
of the entity.
heading such as ‘Other income’
Government grants excludes:
- deducted in reporting the related
● Government assistance which cannot
expense
reasonably have a value placed upon them
● Transaction with the government which
Repayment of Government Grants
cannot be distinguished from the normal
● A government grant that becomes repayable
trading transactions of the entity
shall be accounted for as a change in
accounting estimate.
RECOGNITION
● For grant related to income, the repayment
Government grants shall not be recognised until
shall be applied:
there is reasonable assurance that:
- Initially against any unamortised
1. the entity will comply with the conditions
deferred credit recognised in
attaching to them;
respect of the grant.
2. the grants will be received.
- Excess repayment shall be
Receipt of a grant does not in itself provide
recognised immediately in profit or
conclusive evidence that the conditions attaching to
loss.
the grant have been or will be fulfilled.
● For grant related to assets, the repayment
shall be recognised either by:
Government Grant in Form of Loans - increasing the CA of the asset, with
the cumulative additional
A forgivable loan from the government is treated depreciation that would have been
as a government grant when there is reasonable recognized to date to be
assurance that the entity will meet the terms for recognized immediately in profit or
forgiveness of the loan. loss
- reducing the deferred income
The benefit of a government loan at a balance by the amount repayable.
below-market rate of interest is treated as a
government grant. DISCLOSURES
● Accounting policy adopted for government
The benefit of the below-market rate of interest grants, including the methods of
shall be measured as the difference between the presentation adopted in the financial
initial carrying value of the loan determined in statements.
accordance to IFRS 9 and the proceeds received. ● Nature and extent of government grants
recognised in the financial statements and
an indication of other forms of government
Recognition in Profit or Loss assistance from which the entity has directly
benefited.
Government grants shall be recognised in profit or ● Unfulfilled conditions and other
loss on a systematic basis over the periods in contingencies attaching to government
which the entity recognises as expenses the assistance that has been recognised.
related costs for which the grants are intended to
compensate.

A government grant that becomes receivable as

compensation for expenses or losses already
incurred or for the purpose of giving immediate
financial support to the entity with no future
related costs shall be recognised in profit or loss of
the period in which it becomes receivable.