Question
Required: (a) State the two broad approaches to the accounting treatment of government grants and the arguments in support of each of them. (b) How
Required:
(a) State the two broad approaches to the accounting treatment of government grants and the arguments in support of each of them.
(b) How should a government grant that becomes receivable as compensation for losses already incurred or for the purpose of giving immediate financial support to the enterprise with no future related costs be recognized under IAS 20? (2 marks)
(c) KFL had adopted the accounting policy of presenting all governments grants as a credit in the income statement as a single, separate item. You are required to show extracts from the balance Sheets as at 30 June 1999 and as at 30 June 2000, and from the Income Statements to these two dates, to deal with all the facts stated above, showing the figures that would appear in KFLs financial statements but also showing the figures that would have appeared if KFL had adopted the alternative accounting policy. When the 1999 financial statements were approved by the directors on 25 July 1999, they were confident that exports would be able to be resumed in the near future. The requirements of IAS 37: provisions. . Contingent Liabilities and Contingent Assets should be ignored in relation to the year ended 30 June 1999. (11 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started