Reasonable assurance

Learning objectives

• Determine whether the conditions for recognising a grant are met (reasonable assurance that the entity will comply with the attached conditions and that the grant will be received).L1, L2, L3

Normative references

• IAS 20 §7A grant (including a non-monetary grant at fair value) is recognised only when there is reasonable assurance that the entity will comply with the attached conditions and that the grant will be received.
• IAS 20 §11Once a grant is recognised, any related contingent liability or contingent asset is treated in accordance with IAS 37.

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

2 questions

• Four statements are put forward about the recognition of a government grant. Which one is wrong?L2
• A region has granted Dalmire a grant of EUR 400,000 to modernise a plant, on condition that 60 jobs are maintained for four years. At the reporting date, a reorganisation plan under discussion could bring headcount down to 55 positions; management has not yet made its decision. In three to five sentences, justify the treatment you would adopt at the reporting date.L3