Income grant matching file: costs compensated, period and presentation

Context

Verdalis Textiles SA (fictitious entity, year end 31 December 20X5) has received or is asked to repay four forms of government support: a training programme grant (A), an equipment grant for a machine (B), the repayment of an old equipment grant (C) and an interest-free government loan that finances the extension of a plant (D). The file takes the four forms of support through to the financial statements, with the documents, the judgements, the open points and the review. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Income grant matching file

Purpose of the workpaper

For each income grant (one instance per grant), describe the agreement, enter the amount and the table of costs compensated by period, choose the period to compute, then assess the reasonable assurance and the costs targeted. The allocation basis (here, the proportion of the costs of the period) is a datum of the file, not a rule of the standard. Then prepare the entry: income or deduction from the related expense.

Questions of the file covered by this workpaper

• Does reasonable assurance exist for supports A and B? Justify.
• Compute the share of 20X5 of grant A.
• Record the four forms of support.

• MemoEngagement letterOpen
• ContractAgreement of support AOpen
• ContractSupport B: weaving machineOpen
• ScheduleSupport C: repayable grant XOpen
• ContractSupport D: government loanOpen
• ExtractReply from the regionOpen
• MemoInternal training planOpen