CAF-1 · Chapter 1 · Question 3 of 15
Gamma Ltd received a grant of Rs. 30 million on the condition of employing 50 local residents for three years. In year 2, the workforce drops to 40, triggering a full repayment of the grant. How should this repayment be treated in the books?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) As an adjustment to the unamortized deferred income balance, with any excess recognized immediately in profit or loss.
Explanation
Under IAS 20, a government grant that becomes repayable is treated as a change in accounting estimate. Repayment of a grant related to income is applied first against any unamortized deferred credit set up in respect of the grant, and any excess is recognized immediately in profit or loss.
More IAS 20 Government Assistance and Grants MCQs
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- Q8Which of the following is NOT required to be disclosed under IAS 20?
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