Problem 2: For classroom discussion Government Grants 1. Which of the following is within the scope of PAS 20? a. Government assistance provided in the form of tax benefits. b. Free technical of marketing advice c. Forgivable loan from the government d. Public improvements that benefit the entire community

Recognition and measurement 2. In the case od a nonmonetary grant, which of the following accounting treatments is prescribed by PAS 20? a. Record the asset at replacement cost and the grant at a nominal value. b. Record the grant at a value estimated by management. c. Record both the grant and the asset at the fair value of the nonmonetary asse8.

d. Record only the asset at fair value; do not recognize the fair value of the grant 3. In the case of grants related to an asset, which of these accounting treatments (balance sheet presentation) is prescribed by PAS 20? a. Record the grant at a nominal value in the first year and write it off in the subsequent year. b. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of the asset. c. Record the grant at fair value in the first year and take it to income in the subsequent year. d. Take it to the income statement and disclose it as an extraordinary gain. 4. In the case of grants related to income, which of these accounting treatments is prescribed by PAS 20? a. Credit the grant to general reserve under shareholders equity. b. Present the grant in the income statement as other income or as a separate line item, or deduct it from the related expense. c. Credit the grant to retained earnings on the balance sheet. d. Credit the grant to sales or other revenue from operations in the income statement