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    So ive got a question, ‘a company gets a government grant of $5m to help finance construction. the company credited this grant to the Statement of Profit or Loss when it was received on 1 March 2017, the construction of the park was completed on the 31st December 2017’

    how would you treat this and where would you recognize the Government grant? I know you have to use IAS 20 but im a bit lost on the rest :/
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    (Original post by CleverSquirrel)
    So ive got a question, ‘a company gets a government grant of $5m to help finance construction. the company credited this grant to the Statement of Profit or Loss when it was received on 1 March 2017, the construction of the park was completed on the 31st December 2017’

    how would you treat this and where would you recognize the Government grant? I know you have to use IAS 20 but im a bit lost on the rest :/
    Per IAS 20 as it isn’t a revenue grant you’d need to capitalise it along with the project essentially meaning the project NBV is lower leading to a reduced depreciation charge.
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    (Original post by natninja)
    Per IAS 20 as it isn’t a revenue grant you’d need to capitalise it along with the project essentially meaning the project NBV is lower leading to a reduced depreciation charge.
    Thannnkkk you!!!

    Finally someone else who understands accounting! I ended up putting it down as deffered income and dep it over the 25 years
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    (Original post by CleverSquirrel)
    Thannnkkk you!!!

    Finally someone else who understands accounting! I ended up putting it down as deffered income and dep it over the 25 years
    It is my job haha I’m an audit senior associate at a B4. I think deferring like that is fine, the net effect on equity is the same so considering materiality it’s fine though in this case I think capitalisation is a better approach as it’s more consistent with the use of the funds.
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    (Original post by natninja)
    It is my job haha I’m an audit senior associate at a B4. I think deferring like that is fine, the net effect on equity is the same so considering materiality it’s fine though in this case I think capitalisation is a better approach as it’s more consistent with the use of the funds.
    oohhh no way?!!!! Ive been looking for someone in this field for days trying to get help with this :rofl:

    okie dokie i see, thank you! its just that IAS20 gave 2 options and its so hard to pick one, because i had no idea what one was right or not!

    life saver honestly
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    (Original post by CleverSquirrel)
    oohhh no way?!!!! Ive been looking for someone in this field for days trying to get help with this :rofl:

    okie dokie i see, thank you! its just that IAS20 gave 2 options and its so hard to pick one, because i had no idea what one was right or not!

    life saver honestly
    Yes way. Not hugely familiar with IAS 20 but had to learn it for FAR, generally either option is valid iirc. IFRS 2, IFRS 10, IAS 39, IAS 37, IFRS 13 and IAS 36 are what I’m most familiar with but if you have any questions feel free to ask.
 
 
 
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