Case:Rent Relief

Caravans4Hire Ltd1provides short-term rental of caravans to tourists for camping holidays throughout Australia. Caravans4Hire Ltd leases several large properties in Adelaide, Perth and Sydney, which it needs to park its caravans when not in use. Due to border restrictions, travel restrictions, localised lockdowns and Government advice to stay home, Caravans4Hire Ltd has suffered a significant loss of revenue and cash flow. On 1 May 2020 the National Hotel and Tourism Industry Association2awarded Caravans4Hire Ltd a grant of $360 000 in total for rent relief for the three months ended 31 July 2020.The grant was received in cash on 1 May 2020. Caravans4Hire Ltd is under no obligation to repay the money received.

Question:

All questions should be answered from the perspectiveof Caravans4Hire Ltd.The word lengths are a suggestion only, i.e., they are NOT strict word limits for each part.

a)What is the main accounting policy issue(s)that need to beresolved to account for the grantfrom the National Hotel and Tourism Industry Association?

b)i)Identifyoneprinciple that isrelevant to the accounting policy issue that you identified in part a)by providinga reference for that principle (e.g., AASB XXX, para.zz; or Conceptual Framework, Chapter X, para.x.xx)AND explain why you chose that principle.

(ii) identify another principle that isrelevant to the accounting policy issue that you identified in part a)by providing a reference for that principle

c)Describean accounting policy to account for the grant from the National Hotel and Tourism Industry Association.Do not justify your policy. Just describe it.