File of an asset financed by a specific borrowing and an asset grant

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  CHAUDIERE_BIOMASSE_EMPRUNT_SPECIFIQUE_ET_SUBVENTION_PRODUIT_DIFFERE

• Cash paid on the asset

  Number

  2,300,000

• Other assets transferred for the asset

  Number

  100,000

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

  400,000

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

  2,400,000

• Actual borrowing costs of the construction period (loan statement)

  Number

  144,000

• Investment income on the temporary investment of borrowed funds

  Number

  18,000

• Borrowing costs included (actual costs − investment income)

  Number

  126,000

• Grant deducted from cost (deduction method)

  Number

• Residual value of the asset

  Number

  0

• Useful life of the asset (years)

  Number

  10 years

• Annual release of deferred income (schedule of the agreement)

  Number

  40,000

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

• Carrying amount before the impairment test (including borrowing costs included)

  Number

• Recoverable amount or net realisable value (case data)

  Number

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  2,000,000

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  2,526,000

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  252,600

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  -40,000

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Account	Debit	Credit
  Asset under construction	144,000
  Interest payable		144,000

• Investment income, deducted from the amount included

  Entry

  Account	Debit	Credit
  Cash	18,000
  Asset under construction		18,000

• Grant received, presented as deferred income

  Entry

  Account	Debit	Credit
  Cash	400,000
  Deferred income		400,000

• Grant received, deducted from the cost of the asset under construction

  Entry

  Debit Cash ← Grant deducted from cost (deduction method) ; Credit Asset under construction ← Grant deducted from cost (deduction method)

• Placed in service: transfer of the cost of the asset

  Entry

  Account	Debit	Credit
  Property, plant and equipment	2,526,000
  Asset under construction		2,526,000

• Depreciation on the cost including borrowing costs

  Entry

  Account	Debit	Credit
  Depreciation expense	252,600
  Accumulated depreciation		252,600

• Annual release of deferred income to profit or loss

  Entry

  Account	Debit	Credit
  Deferred income	40,000
  Grant income		40,000

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deferred income

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedPass
• Transfer entry balancedPass
• Depreciation entry balancedPass

Assets

291,400

Liabilities

504,000

Profit or loss

-212,600

OCI

0

Equity

-212,600

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  CHAUDIERE_BIOMASSE_EMPRUNT_SPECIFIQUE_ET_SUBVENTION_DEDUITE_DU_COUT

• Cash paid on the asset

  Number

• Other assets transferred for the asset

  Number

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

  400,000

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

  2,400,000

• Actual borrowing costs of the construction period (loan statement)

  Number

• Investment income on the temporary investment of borrowed funds

  Number

• Borrowing costs included (actual costs − investment income)

  Number

  126,000

• Grant deducted from cost (deduction method)

  Number

  400,000

• Residual value of the asset

  Number

  0

• Useful life of the asset (years)

  Number

  10 years

• Annual release of deferred income (schedule of the agreement)

  Number

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

• Carrying amount before the impairment test (including borrowing costs included)

  Number

• Recoverable amount or net realisable value (case data)

  Number

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  -400,000

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  2,126,000

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  212,600

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  0

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Debit Asset under construction ← Actual borrowing costs of the construction period (loan statement) ; Credit Interest payable ← Actual borrowing costs of the construction period (loan statement)

• Investment income, deducted from the amount included

  Entry

  Debit Cash ← Investment income on the temporary investment of borrowed funds ; Credit Asset under construction ← Investment income on the temporary investment of borrowed funds

• Grant received, presented as deferred income

  Entry

  Account	Debit	Credit
  Cash	400,000
  Deferred income		400,000

• Grant received, deducted from the cost of the asset under construction

  Entry

  Account	Debit	Credit
  Cash	400,000
  Asset under construction		400,000

• Placed in service: transfer of the cost of the asset

  Entry

  Account	Debit	Credit
  Property, plant and equipment	2,126,000
  Asset under construction		2,126,000

• Depreciation on the cost including borrowing costs

  Entry

  Account	Debit	Credit
  Depreciation expense	212,600
  Accumulated depreciation		212,600

• Annual release of deferred income to profit or loss

  Entry

  Debit Deferred income ← Annual release of deferred income (schedule of the agreement) ; Credit Grant income ← Annual release of deferred income (schedule of the agreement)

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deduction from the cost of the asset

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedPass
• Transfer entry balancedPass
• Depreciation entry balancedPass

Assets

187,400

Liabilities

400,000

Profit or loss

-212,600

OCI

0

Equity

-212,600

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  COMPARAISON_DES_DEUX_PRESENTATIONS

• Cash paid on the asset

  Number

• Other assets transferred for the asset

  Number

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

• Actual borrowing costs of the construction period (loan statement)

  Number

• Investment income on the temporary investment of borrowed funds

  Number

• Borrowing costs included (actual costs − investment income)

  Number

• Grant deducted from cost (deduction method)

  Number

• Residual value of the asset

  Number

• Useful life of the asset (years)

  Number

• Annual release of deferred income (schedule of the agreement)

  Number

  40,000

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

  252,600

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

  212,600

• Carrying amount before the impairment test (including borrowing costs included)

  Number

• Recoverable amount or net realisable value (case data)

  Number

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  0

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  0

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  0

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Debit Asset under construction ← Actual borrowing costs of the construction period (loan statement) ; Credit Interest payable ← Actual borrowing costs of the construction period (loan statement)

• Investment income, deducted from the amount included

  Entry

  Debit Cash ← Investment income on the temporary investment of borrowed funds ; Credit Asset under construction ← Investment income on the temporary investment of borrowed funds

• Grant received, presented as deferred income

  Entry

  Debit Cash ← Grant received for the asset ; Credit Deferred income ← Grant received for the asset

• Grant received, deducted from the cost of the asset under construction

  Entry

  Debit Cash ← Grant deducted from cost (deduction method) ; Credit Asset under construction ← Grant deducted from cost (deduction method)

• Placed in service: transfer of the cost of the asset

  Entry

  Debit Property, plant and equipment ← Cost of the asset = expenditure + borrowing costs included − grant deducted ; Credit Asset under construction ← Cost of the asset = expenditure + borrowing costs included − grant deducted

• Depreciation on the cost including borrowing costs

  Entry

  Debit Depreciation expense ← Annual depreciation = (cost of the asset − residual value) ÷ useful life ; Credit Accumulated depreciation ← Annual depreciation = (cost of the asset − residual value) ÷ useful life

• Annual release of deferred income to profit or loss

  Entry

  Account	Debit	Credit
  Deferred income	40,000
  Grant income		40,000

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedNot filled in this instance
• Transfer entry balancedNot evaluated
• Depreciation entry balancedNot evaluated

Assets

0

Liabilities

-40,000

Profit or loss

40,000

OCI

0

Equity

40,000

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  FOUR_SUBVENTION_EN_PRODUIT_DIFFERE

• Cash paid on the asset

  Number

  2,100,000

• Other assets transferred for the asset

  Number

  100,000

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

  300,000

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

  2,200,000

• Actual borrowing costs of the construction period (loan statement)

  Number

• Investment income on the temporary investment of borrowed funds

  Number

• Borrowing costs included (actual costs − investment income)

  Number

  55,000

• Grant deducted from cost (deduction method)

  Number

• Residual value of the asset

  Number

  0

• Useful life of the asset (years)

  Number

  10 years

• Annual release of deferred income (schedule of the agreement)

  Number

  30,000

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

• Carrying amount before the impairment test (including borrowing costs included)

  Number

  2,255,000

• Recoverable amount or net realisable value (case data)

  Number

  2,400,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  1,900,000

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  2,255,000

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  225,500

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  -30,000

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  2,255,000

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Debit Asset under construction ← Actual borrowing costs of the construction period (loan statement) ; Credit Interest payable ← Actual borrowing costs of the construction period (loan statement)

• Investment income, deducted from the amount included

  Entry

  Debit Cash ← Investment income on the temporary investment of borrowed funds ; Credit Asset under construction ← Investment income on the temporary investment of borrowed funds

• Grant received, presented as deferred income

  Entry

  Account	Debit	Credit
  Cash	300,000
  Deferred income		300,000

• Grant received, deducted from the cost of the asset under construction

  Entry

  Debit Cash ← Grant deducted from cost (deduction method) ; Credit Asset under construction ← Grant deducted from cost (deduction method)

• Placed in service: transfer of the cost of the asset

  Entry

  Account	Debit	Credit
  Property, plant and equipment	2,255,000
  Asset under construction		2,255,000

• Depreciation on the cost including borrowing costs

  Entry

  Account	Debit	Credit
  Depreciation expense	225,500
  Accumulated depreciation		225,500

• Annual release of deferred income to profit or loss

  Entry

  Account	Debit	Credit
  Deferred income	30,000
  Grant income		30,000

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deferred income

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedPass
• Transfer entry balancedPass
• Depreciation entry balancedPass

Assets

74,500

Liabilities

270,000

Profit or loss

-195,500

OCI

0

Equity

-195,500

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  FOUR_SUBVENTION_DEDUITE_DU_COUT

• Cash paid on the asset

  Number

• Other assets transferred for the asset

  Number

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

  2,200,000

• Actual borrowing costs of the construction period (loan statement)

  Number

• Investment income on the temporary investment of borrowed funds

  Number

• Borrowing costs included (actual costs − investment income)

  Number

  55,000

• Grant deducted from cost (deduction method)

  Number

  300,000

• Residual value of the asset

  Number

  0

• Useful life of the asset (years)

  Number

  10 years

• Annual release of deferred income (schedule of the agreement)

  Number

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

• Carrying amount before the impairment test (including borrowing costs included)

  Number

• Recoverable amount or net realisable value (case data)

  Number

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  0

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  1,955,000

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  195,500

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  0

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Debit Asset under construction ← Actual borrowing costs of the construction period (loan statement) ; Credit Interest payable ← Actual borrowing costs of the construction period (loan statement)

• Investment income, deducted from the amount included

  Entry

  Debit Cash ← Investment income on the temporary investment of borrowed funds ; Credit Asset under construction ← Investment income on the temporary investment of borrowed funds

• Grant received, presented as deferred income

  Entry

  Debit Cash ← Grant received for the asset ; Credit Deferred income ← Grant received for the asset

• Grant received, deducted from the cost of the asset under construction

  Entry

  Account	Debit	Credit
  Cash	300,000
  Asset under construction		300,000

• Placed in service: transfer of the cost of the asset

  Entry

  Account	Debit	Credit
  Property, plant and equipment	1,955,000
  Asset under construction		1,955,000

• Depreciation on the cost including borrowing costs

  Entry

  Account	Debit	Credit
  Depreciation expense	195,500
  Accumulated depreciation		195,500

• Annual release of deferred income to profit or loss

  Entry

  Debit Deferred income ← Annual release of deferred income (schedule of the agreement) ; Credit Grant income ← Annual release of deferred income (schedule of the agreement)

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deduction from the cost of the asset

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedPass
• Transfer entry balancedPass
• Depreciation entry balancedPass

Assets

-195,500

Liabilities

0

Profit or loss

-195,500

OCI

0

Equity

-195,500

• Qualifying asset financed by a specific borrowing and an asset grant: agreements and conditions

  Text

  COMPARAISON_DES_DEUX_PRESENTATIONS

• Cash paid on the asset

  Number

• Other assets transferred for the asset

  Number

• Interest-bearing liabilities assumed for the asset

  Number

• Progress payments received

  Number

• Grant received for the asset

  Number

• Expenditure incurred on the asset before the grant (excluding borrowing costs)

  Number

• Actual borrowing costs of the construction period (loan statement)

  Number

• Investment income on the temporary investment of borrowed funds

  Number

• Borrowing costs included (actual costs − investment income)

  Number

• Grant deducted from cost (deduction method)

  Number

• Residual value of the asset

  Number

• Useful life of the asset (years)

  Number

• Annual release of deferred income (schedule of the agreement)

  Number

  30,000

• Annual depreciation on the cost without any grant deducted (deferred income presentation)

  Number

  225,500

• Annual depreciation on the cost net of the grant (deduction presentation)

  Number

  195,500

• Carrying amount before the impairment test (including borrowing costs included)

  Number

• Recoverable amount or net realisable value (case data)

  Number

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Points reviewed: net expenditure, presentation, cost, depreciation, recoverable amount

  ChecklistRequired

  • Eligible expenditure computed net of the grant received
  • Presentation of the grant fixed (deferred income or deduction)
  • Cost of the asset including borrowing costs included
  • Depreciation computed from the date placed in service
  • Carrying amount compared with the recoverable amount

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Eligible expenditure net of the grant

  Calculation

  0

  Cash paid on the asset ; Other assets transferred for the asset ; Interest-bearing liabilities assumed for the asset ; − Progress payments received ; − Grant received for the asset

• Cost of the asset = expenditure + borrowing costs included − grant deducted

  Calculation

  0

  Expenditure incurred on the asset before the grant (excluding borrowing costs) ; Borrowing costs included (actual costs − investment income) ; − Grant deducted from cost (deduction method)

• Annual depreciation = (cost of the asset − residual value) ÷ useful life

  Calculation

  Cost of the asset = expenditure + borrowing costs included − grant deducted ; Residual value of the asset ; Useful life of the asset (years)

• Difference in net effect on profit or loss between the two presentations

  Calculation

  0

  Annual depreciation on the cost without any grant deducted (deferred income presentation) ; − Annual release of deferred income (schedule of the agreement) ; − Annual depreciation on the cost net of the grant (deduction presentation)

• Carrying amount after the test = lower of (carrying amount; recoverable amount)

  Calculation

  Carrying amount before the impairment test (including borrowing costs included) ; Recoverable amount or net realisable value (case data)

• Actual borrowing costs included in the asset under construction

  Entry

  Debit Asset under construction ← Actual borrowing costs of the construction period (loan statement) ; Credit Interest payable ← Actual borrowing costs of the construction period (loan statement)

• Investment income, deducted from the amount included

  Entry

  Debit Cash ← Investment income on the temporary investment of borrowed funds ; Credit Asset under construction ← Investment income on the temporary investment of borrowed funds

• Grant received, presented as deferred income

  Entry

  Debit Cash ← Grant received for the asset ; Credit Deferred income ← Grant received for the asset

• Grant received, deducted from the cost of the asset under construction

  Entry

  Debit Cash ← Grant deducted from cost (deduction method) ; Credit Asset under construction ← Grant deducted from cost (deduction method)

• Placed in service: transfer of the cost of the asset

  Entry

  Debit Property, plant and equipment ← Cost of the asset = expenditure + borrowing costs included − grant deducted ; Credit Asset under construction ← Cost of the asset = expenditure + borrowing costs included − grant deducted

• Depreciation on the cost including borrowing costs

  Entry

  Debit Depreciation expense ← Annual depreciation = (cost of the asset − residual value) ÷ useful life ; Credit Accumulated depreciation ← Annual depreciation = (cost of the asset − residual value) ÷ useful life

• Annual release of deferred income to profit or loss

  Entry

  Account	Debit	Credit
  Deferred income	30,000
  Grant income		30,000

IAS 23 §8IAS 23 §16IAS 23 §18IAS 23 §26

• Presentation chosen for the asset grant

  JudgmentRequired

  Deferred income / Deduction from the cost of the asset

  Rule and cross-reference: eligible expenditure is net of progress payments and grants received for the asset (IAS 23, para. 18); the presentation of the grant (deferred income or deduction from the carrying amount) falls under IAS 20 and remains a choice of the entity.

• Rationale: method chosen (IAS 20) and consistency with the entity's policy

  TextRequired

• Effect of the entries, line by line (derived from the entries)

  Table

IAS 23 §18IAS 23 §26

• Disclosures: amount included and grant

  ChecklistRequired

  • Amount of borrowing costs included stated
  • Eligible expenditure net of the grant recalled

• Paragraphs cited in this workpaper and their verification status

  References

• Presentation of the grant documentedNot filled in this instance
• Transfer entry balancedNot evaluated
• Depreciation entry balancedNot evaluated

Assets

0

Liabilities

-30,000

Profit or loss

30,000

OCI

0

Equity

30,000