AASB 120 - Accounting for Government Grants and Disclosure of Government Assistance - July 2004
Presentation of Grants Related to AssetsPresentation of Grants Related to Assets
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Presentation of Grants Related to Assets
24 Government grants related to assets, including non‑monetary grants at fair value, shall be presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.
25 Two methods of presentation in financial statements of grants (or the appropriate portions of grants) related to assets are regarded as acceptable alternatives.
26 One method recognises the grant as deferred income that is recognised in profit or loss on a systematic basis over the useful life of the asset.
27 The other method deducts the grant in calculating the carrying amount of the asset. The grant is recognised in profit or loss over the life of a depreciable asset as a reduced depreciation expense.
28 The purchase of assets and the receipt of related grants can cause major movements in the cash flow of an entity. For this reason and in order to show the gross investment in assets, such movements are often disclosed as separate items in the statement of cash flows regardless of whether or not the grant is deducted from the related asset for presentation purposes in the statement of financial position.