CERTYNEX IFRS ACADEMY

Giraud acquires a plant for EUR 800,000, depreciable over 10 years (straight-line, no residual value), and receives a grant of EUR 200,000. It hesitates between deferred income and deduction from the carrying amount. Which statement correctly describes the effect of the deferred income method, compared with deduction, on the first year?

Net profit for the first year is EUR 20,000 lower with deferred income.

Total assets in the statement of financial position are the same, whichever presentation method the entity chooses.

Depreciation for the year is EUR 60,000 with deferred income, as it is with deduction.

Same net profit; depreciation of EUR 80,000 with deferred income against 60,000 with deduction.