Chapter 8: Disclosure

An entity that has recognised government grant income should make the following disclosures:

• The accounting policy applied for recognising the grant.
• The method of presentation applied in the financial statements.
• The nature and extent of government grants recognised.
• An indication of other forms of government assistance from which the entity has directly benefited.
• Unfulfilled conditions and other contingencies attaching to government assistance that has been recognised.

When grants relate to income, the Standard suggests that:

• separate disclosure of a grant may be necessary for a proper understanding of the financial statements; and
• disclosure of the effect of the grant on any item of income or expense that is required to be disclosed separately is usually appropriate.

Separate disclosure should, in particular, be considered when a grant has been netted against the related expense in profit or loss.

IAS 20 also requires an indication of forms of government assistance other than government grants from which the entity has directly benefited.

Although the benefit resulting from such forms of assistance may not be measurable, the impact of items such as free technical or marketing advice, or guarantees should be disclosed where it is significant.

Even though such assistance is not recognized as income in the financial statements, it may benefit the entity to such an extent that disclosure of the nature, extent and duration of the assistance is necessary for the financial statements not to be misleading.