Repayment of an income grant

Learning objectives

• Record the repayment of a grant related to income (first against any unamortised deferred credit, then as an immediate expense).L2, L3

Normative references

• IAS 20 §32A grant that becomes repayable is accounted for as a change in accounting estimate (IAS 8); (a) grant related to income: the repayment is applied first against any unamortised deferred credit, and any excess (or the whole amount when there is no deferred credit) is recognised immediately in profit or loss; (b) grant related to an asset: the repayment increases the carrying amount of the asset or reduces the deferred income balance, and the cumulative additional depreciation that would have been recognised in the absence of the grant is recognised immediately in profit or loss.

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

3 questions

• When an income grant becomes repayable, the amount repayable is expensed immediately without first being set against the unreleased deferred income.L2
• Pinel had received EUR 90,000 for a three-year training programme, recorded as deferred income and released over two years. The programme is called into question: the grant becomes repayable for {repayment_amount}, while the deferred income not yet released is {deferred_income_balance}. Calculate the expense to recognise immediately.L3
• A grant of EUR 150,000 financed research costs over five years for Quentin and was released to profit or loss each year. At the end of the third year, it becomes repayable for {repayment_amount}; {deferred_income_balance} of deferred income remains to be released. What expense must be recognised immediately?L3