FRS 102: How to account for grants

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Steven Collings
Audit and Technical Partner
Leavitt Walmsley Associates Ltd
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FRS 102 becomes mandatory for accounting periods starting on or after 1 January 2015. Steve Collings considers accounting for grants under the new GAAP.

Government grants are defined in the glossary to FRS 102 as:

“Assistance by government in the form of a transfer of resources to an entity in return for past or future compliance with specified conditions relating to the operating activities of the entity.  Government refers to government, government agencies and similar bodies whether local, national or international.”

The scope of Section 24 does not extend to government assistance which an entity receives in the form of benefits which are available in arriving at taxable profit (or loss) or are determined or limited on the basis of income tax liability. Paragraph 24.3 cites examples of income tax holidays, investment tax credits, accelerated depreciation allowances and reduced income tax rates. Any aspects relating to income tax are dealt with in Section 29 Income Tax

Recognition and measurement

The overarching principle contained in Section 24 is that...

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  • The performance model
  • The accrual model
  • Non-monetary grants
  • Conclusion

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06th Aug 2014 11:52

Asset-based grant.

What if the grant is for the purcase of residential property which will be maintained / improved so that depreciation will not apply? Does the grant then never become recognised in the P & L?

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