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Commission Regulation (EC) No 1725/2003 of 29 September
2003 adopting certain international accounting standards
in accordance with Regulation (EC) No 1606/2002 of the
European Parliament and of the Council.
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Government assistance - no specific
relation to operating activities
Paragraph 11 of IAS 1 (revised
2004), presentation of
financials statements, requires that financial statements
should not be described as complying with International
Accounting Standards unless they comply with all the
requirements of each applicable standard and each applicable
interpretation issued by the Standing Interpretations
Committee. SIC interpretations are not intended to apply to
immaterial items.
Reference: IAS 20, accounting for government grants and
disclosure of government assistance.
Issue
1. In some countries government assistance to enterprises
may be aimed at encouragement or long-term support of business
activities either in certain regions or industry sectors.
Conditions to receive such assistance may not be specifically
related to the operating activities of the enterprise.
Examples of such assistance are transfers of resources by
governments to enterprises which:
(a) operate in a particular industry;
(b) continue operating in recently privatised industries;
or
(c) start or continue to run their business in
underdeveloped areas.
2. The issue is whether such government assistance is a "government
grant" within the scope of IAS 20 and, therefore, should be
accounted for in accordance with this standard.
Consensus
3. Government assistance to enterprises meets the
definition of government grants in IAS 20, even if there are
no conditions specifically relating to the operating
activities of the enterprise other than the requirement to
operate in certain regions or industry sectors. Such grants
should therefore not be credited directly to equity.
Date of consensus: January 1998.
Effective date: This interpretation becomes effective on 1
August 1998. Changes in accounting policies should be
accounted for according to the transition requirements of IAS
8.46.
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