Government Grants Quiz

How are non-monetary government grants recorded?

• At historical cost

• At fair value

• At nominal value

• Not recognized

Government assistance excludes:

• Benefits that cannot be reasonably measured

• Grants related to income

• Asset-based grants

• Loans with low interest

Which journal entry reflects the receipt of an income-related grant?

• Dr Deferred Income, Cr Equipment

• Dr Asset, Cr Government Grant Income

• Dr Cash, Cr Deferred Income

• Dr Expense, Cr Asset

What is a forgivable loan?

• Loan waived upon fulfilling conditions

• Loan with high interest

• Loan repaid in kind

• Loan tied to inflation

Which statement best describes the treatment of asset-related grants?

• They can be deducted from the asset or recognized as deferred income

• They are always income

• They reduce liabilities

• They bypass financial statements

When are grants recognized in profit or loss?

• When received

• When approved by the government

• When conditions are met

• At the end of the financial year

The presentation method of asset-related grants in SOFP may involve:

• Deferred income or asset reduction

• Revaluation reserve

• Tax expense classification

• Amortized cost method

In the SOPL, a government grant may appear as:

• Other income

• Liability

• Equity adjustment

• Finance cost

Which of the following is NOT a type of government grant under IAS 20?

• Forgivable loans

• Non-monetary grants

• Tax credits under IAS 12

• Income-related grants

Disclosure of government grants must include:

• Nature and extent of assistance

• Interest rate

• Country of origin

• Currency used