CAF-1 · Chapter 1 · Question 7 of 15
If an entity receives a grant related to an asset and accounts for it by deducting the grant from the asset's carrying amount, how is the grant recognized in profit or loss over time?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) By way of a reduced depreciation charge over the useful life of the asset.
Explanation
Deducting the grant from the asset's cost results in a reduced depreciable amount, meaning the grant is recognized through reduced depreciation charges over the asset's life.
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