Forms of government assistance

Learning objectives

• Distinguish the forms of government assistance that are grants from those that are not (assistance that cannot reasonably have a value placed on it, normal trading transactions).L1, L2

Normative references

• IAS 20 §4Government assistance takes many forms, varying both in nature and in the conditions attached to it; its purpose is often to encourage an entity to embark on a course of action that it would not otherwise have taken.
• IAS 20 §5Government assistance matters to the financial statements for two reasons: an appropriate method of accounting for the resources transferred must be found, and the extent to which the entity has benefited from such assistance during the period should be given, which facilitates comparison over time and with other entities.
• IAS 20 §6Government grants are sometimes called by other names (subsidies, subventions, premiums, etc.).
• IAS 20 §34Excluded from the definition of government grants: government assistance that cannot reasonably have a value placed upon it and transactions with government that cannot be distinguished from the normal trading transactions of the entity.

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

1 question

• Any transaction with the government is a government grant under IAS 20 as soon as it gives the entity a benefit, including a sale made on normal market terms.L2