Fair value or nominal amount

Learning objectives

• Determine the initial amount of an asset received as a grant (fair value, or a nominal amount for both the asset and the grant).L2, L3
• Justify and defend in a professional file (L4) the treatment adopted for the "Non-monetary grants: fair value or nominal amount" concept, distinguishing the IFRS requirement, the case data, the teaching assumption and judgement.L4

Normative references

• IAS 20 §23Non-monetary grant: both the asset and the grant are recognised at fair value, or both at a nominal amount.

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

3 questions

• A municipality transfers a plot of land to an entity free of charge, which is a non-monetary grant. At what amount does IAS 20 allow the land and the grant to be recognised?L2
• A public body transfers to Lacombe an item of equipment whose fair value, a case input, is {fair_value}, for a price of {consideration_paid}. Case convention: the entity recognises the equipment at fair value and the difference from the price paid is the non-monetary grant. Calculate the amount of the grant.L3
• A municipality transfers an industrial building to Ardant free of charge; its fair value, a case input, is {fair_value}. Case conventions: the non-monetary grant is recognised at fair value and presented as deferred income. Record the entry on receipt.L3