Specific costs

Learning objectives

• Identify the specific costs compensated by a grant in order to determine how it is matched.L2, L3

Normative references

• IAS 20 §12Income approach: the grant is recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grant is intended to compensate.
• IAS 20 §17The periods of the related costs are usually readily ascertainable: a grant for specific expenses follows those expenses; a grant related to a depreciable asset is usually recognised in proportion to the depreciation expense on that asset.
• IAS 20 §19Grant received as part of a package of aids with several conditions: identify the conditions that give rise to costs and determine the periods; part of the grant may be allocated on one basis and part on another.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Pascal receives {grant_amount} to compensate certification costs specifically named in the agreement, expected to total {total_eligible_costs}. During the year it recognises {eligible_costs_period} of these costs, as well as {other_costs_period} of other expenses not covered by the agreement. Case convention: allocation in proportion to the named costs. Calculate the grant recognised in profit or loss for the year.L2
• Rivière receives EUR 200,000 from a public programme "for the site's environmental certification costs". It has incurred EUR 120,000 of certification body fees, EUR 40,000 of general organisational consulting and EUR 30,000 of its own staff time; the agreement lists the certification body fees but is silent on consulting and staff. In three to five sentences, justify how you would identify the costs compensated before matching the grant.L3