BIANCO PLC

On 1 October 2016 the government provided Biancos with a grant of 23 million to assist it in the development of a new factory. This grant was in two parts:

1. 8 million of the grant was a payment by the government as an inducement to Biancos to begin developing the factory. No conditions were attached to this part of the grant.
2. 15 million of the grant related to the construction of the factory at a cost of 60 million. The land was leased so the whole of the 60 million is depreciable over the estimated 40 year useful life of the factory.

Required:

1. Explain how the grant of 23 million should be reported in the financial statements of Biancos for the year ended 30 September 2017 in accordance with IAS 20 Accounting for government grants.

Where IAS 20 allows alternative treatments of any part of the grant you should explain both treatments.