My client has received a capital grant previously and this was posted to Deferred income. However this grant was for building improvements, and my client's depreciation policy is not to depreciate buildings. Normally i would release the deferred income to the P&L over the useful life of the asset ie at the same rate as depreciation. How should i release this deferred income to the P&L in this instance, where there is no depreciation expense to fulfil the Matching Principle of government grants. I have checked the original expenditure and it does qualify as capital expenditure and so the grant is definitely not a revenue grant.
I have checked FRS102 section 24, and IAS 20 and neither have anything on this
The only thing i can think off is that the improvements should have been added as a seperate class of asset and depreciated?? would this be correct or am i missing something?