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IAS 20Case studies (Step 3 of 5)

Case study

Step 3 of 5
Practical caseIAS 20L1 · Fundamental

Five forms of public support: grant, assistance that is not a grant, or unmet condition

3 documents5 tasks≈ 40 min
0 / 7 items completed
Standards
IAS 20 — Accounting for Government Grants and Disclosure of Government Assistance
Assistance levelFull guidance · strong assistance
  • Method: shown
  • Checklist: shown
  • Hints: shown
  • Step-by-step work: shown

Case brief

Situation

Fonderie Armand SA (fictitious entity) closes its books on 31 December 20X5. The accounting department must characterise five forms of public support received or announced in 20X5: some are government grants, others are assistance that is not a grant, and the last depends on a condition that is not met at the closing date.

Your assignment

Characterise each of the five forms of support; assess the reasonable assurance for the conditional grant; state the period to which the grant for costs already incurred relates; record that grant (case data) and present its effect; conclude.

Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.

Fundamental level: the method, help and references are shown.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 3 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 7) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

3 documents: open each one to read it.

Document 1Table

Register of public support

Register of public support at 31 December 20X5. Support 1: the regional development agency pays 60,000 EUR to reimburse staff training costs already incurred and expensed in 20X5, with no condition remaining. Support 2: free access to a public technical advisory service, whose benefit cannot be reasonably measured. Support 3: grant of 200,000 EUR awarded on condition of creating 30 jobs before 31 December 20X7; at the closing date, 4 jobs have been created and no funded recruitment plan exists. Support 4: a public body buys parts from the entity at its usual selling price, under an ordinary call for tenders. Support 5: grant of 90,000 EUR received to finance the acquisition of a machine, bought and installed in 20X5, all conditions met.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Grant awarded for the training costs (support 1)€60,000.00
Training costs incurred in 20X5 (support 1)€60,000.00
Training catalogue 20X6€4,500.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort3

  • Register of public support

  • Letter from the regional agency (support 1)

  • Training catalogue 20X6

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      5 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.

      1. Task 1Analysis

        Characterise each of the five forms of support (government grant, assistance that is not a grant, grant related to assets).

        Set out the facts, the question raised, then your analysis.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      2. Task 2Analysis

        Does reasonable assurance exist for support 3, and to which period does support 1 relate?

        Set out the facts, the question raised, then your analysis.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      3. Task 3Journal entries

        Record the grant of support 1.

        Identify the accounts affected and the direction of each movement; check the balance.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 1

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      4. Task 4Effects on the financial statements

        What is its effect on the financial statements?

        For each financial statement, state the line affected, the direction and the amount.

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €
        2. €
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      5. Task 5Conclusion

        Write the conclusion.

        Write a conclusion that cites the facts and the treatment chosen.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      Workspace

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 7).

      Normative references

      • IAS 20 §3
      • IAS 20 §4
      • IAS 20 §5
      • IAS 20 §6
      • IAS 20 §7
      • IAS 20 §12
      • IAS 20 §20