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MASB31 Accounting for Government Grants and Disclosure of Government Assistance Summary

MASB 31, ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE

MASB 31 deals with accounting for and disclosure of government grants, and the disclosure of other forms of government assistance.

Highlights:
1.Government grants shall not be recognised until there is reasonable assurance that: (a) the entity will comply with the conditions attaching to them; and (b) the grants will be received.
2.Government grants shall be recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. They shall not be credited directly to shareholders' interests.
3.Government grants related to assets shall be presented in the balance sheet either:
 
 
(i)by setting up the grant as deferred income; or
(ii)by deducting the grant in arriving at the carrying amount of the asset and in which case, additional information similar to setting up the grant as deferred income and a reconciliation of depreciation before and after deduction of related government grant shall be disclosed.
4.Grants related to income shall be presented as a credit in the income statement, either separately or under a general heading such as "Other income". Alternatively, the grant related to income shall be deducted in reporting the related expense, and in which case, the entity shall disclose a reconciliation of the related expense before and after deduction of the grant, as well as the reason why this alternative is adopted.
5.Repayment of a grant related to income shall be applied first against any unamortised deferred credit set up in respect of the grant. Any repayment in excess of such deferred credit shall be recognised immediately as an expense.

Repayment of a grant related to an asset shall be recorded by increasing the carrying amount of the asset or reducing the deferred income balance by the amount repayable. The cumulative additional depreciation that would have been recognised to date as an expense in the absence of the grant shall be recognised immediately as an expense.

6.The following matters shall be disclosed: (a) the accounting policy adopted for government grants; (b) the nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance; and (c) unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.


Effective Date: 1 January 2004

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