PLEASE EXPLAIN BRIEFLY

ASAP!

20. A government grant that becomes receivable as

compensation for expenses or losses incurred in a

previous period

a. Shall be recognized in profit or loss of the period in

which it is received.

b. Shall be recognized in retained earnings in the

period in which it becomes receivable.

c. Shall be credited directly to equity in the period in

which it becomes receivable.

d. Shall be recognized in profit or loss of the period in

which it becomes receivable.

21. Which statement is incorrect regarding a grant that

becomes repayable?

a. Repayment of a grant related to an asset shall be

recognized by increasing the carrying amount of

the asset or reducing the deferred income balance

by the amount repayable.

b. The cumulative additional depreciation that would

have been recognized in profit or loss to date in

the absence of the grant shall be recognized

immediately in profit or loss.

c. Repayment of a grant related to income shall be

applied first against any unamortized deferred

credit recognized in respect of the grant.

d. To the extent that the repayment exceeds any

deferred credit, or when no deferred credit exists,

the repayment shall be recognized immediately in

retained earnings.

22. PAS 20 requires the following disclosures

I. The accounting policy adopted for government

grants, including the methods of presentation

adopted in the financial statements.

II. The nature and extent of government grants

recognized in the financial statements and an

indication of other forms of government assistance

from which the entity has directly benefited.

III. Unfulfilled conditions and other contingencies

attaching to government assistance that has been

recognized.

a. I, II and III c. I and III only

b. I and II only d. II and III only

23. Which statement is incorrect regarding government

grants covered by PAS 41?

a. An unconditional government grant related to a

biological asset measured at its fair value less

costs to sell shall be recognized in profit or loss

when, and only when, the government grant

becomes receivable.

b. If a government grant related to a biological asset

measured at its fair value less costs to sell is

conditional, including when a government grant

requires an entity not to engage in specified

agricultural activity, an entity shall recognize the

government grant in profit or loss when, and only

when, the conditions attaching to the government

grant are met.

c. If a government grant relates to a biological asset

measured at its cost less any accumulated

depreciation and any accumulated impairment

losses, PAS 20 is applied.

d. None of the above.

24. A public limited company, Eks Dairy Products,

produces milk on its farms. The company has had

problems during 2020. Contaminated milk was sold to

customers. As a result, milk consumption has gone

down. The government decided to compensate

farmers for potential loss in revenue from sale of milk.

This fact was published in the national press on

December 1, 2020. Eks received an official letter on

December 15, 2020, stating that P1 million would be

paid to it on April 3, 2021.

The entity should recognize income from government

grant of

a. P1 million on December 1, 2020

b. P1 million on December 15, 2020

c. P1 million on April 3, 2021

d. Nil

25. A grant may require an entity to farm in a particular

location for five years and require the entity to return

all of the grant if it farms for a period shorter than five

years. In this case, PAS 41 requires that the grant

a. Is not recognized in profit or loss until the five

years have passed.

b. Is not recognized in equity until the five years have

passed.

c. Is recognized in profit or loss as time passes.

d. Is recognized in equity as time passes.

26. In accordance with PAS 41, an entity shall disclose the

following in relation to government grants related to

agricultural activity:

a. The nature and extent of government grants

recognized in the financial statements.

b. Unfulfilled conditions and other contingencies

attaching to government grants.

c. Significant decreases expected in the level of

government grants.

d. All of the above.