Acquisition by way of a government grant

Learning objectives

• Distinguish the two initial measurements permitted for an intangible asset acquired by way of a government grant.L3
• Recognise a licence received free of charge from the government according to the option chosen.L3

Normative references

• IAS 38 §44An intangible asset acquired free of charge, or for nominal consideration, by way of a government grant: the asset and the grant at fair value, or a nominal amount plus any directly attributable expenditure (options under IAS 20).

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

7 questions

• Aeralis receives airport slot rights free of charge from the State by way of a government grant. Which initial measurement treatments does IAS 38 permit?L2
• An entity receives an intangible asset free of charge from the State by way of a government grant. Which initial measurements are permitted?L3
• The airline Alvea receives landing rights at a regional airport free of charge from the State. Their fair value is estimated at 900,000. Alvea bears 12,000 of legal fees directly attributable to obtaining and preparing these rights. It chooses to recognise the asset at a nominal amount plus directly attributable expenditure. What is the initial amount of the asset?L3
• The regulator grants the operator Telvio, by way of a government grant, a licence to use radio frequencies. Which statements are correct?L3
• The State grants Ventoria free of charge, by way of a government grant, a licence to operate a network of charging stations on motorways. The fair value of the licence is {licence_fair_value}. Ventoria chooses to recognise the asset and the grant at fair value; under its accounting policy, the grant is presented as deferred income. Record the entry on the award.L3
• By way of a government grant, the port authority grants the shipowner Kalypso the right to operate a quay for a nominal price of {symbolic_price}, paid in cash. Kalypso also pays {direct_costs} in cash for legal and technical costs directly attributable to preparing this right. The fair value of the right is estimated at {concession_fair_value}. Kalypso opts for measurement at the nominal amount plus directly attributable expenditure. Record the entry.L3
• The fishing cooperative Morvenn is allocated multi-year fishing quotas free of charge by the authorities, by way of a government grant, with a fair value of {quota_fair_value}. It opts to recognise the asset and the grant at fair value, the grant being presented as deferred income under its accounting policy. Record the allocation of the quotas.L3