CERTYNEX IFRS ACADEMY

A government loan is granted at an interest rate below the market rate. How does IAS 20 treat the benefit this gives to the borrower?

As a grant, equal to the difference between the initial carrying amount of the loan under IFRS 9 and the proceeds received.

As immediate finance income, taken directly to equity.

As an adjustment to the interest rate applied to the loan in later years.

As non-quantifiable government assistance, which the entity mentions in the notes without seeking to measure or recognise it.