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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
34. Excluded from the definition
of government grants in paragraph 3 are certain forms of
government assistance which cannot reasonably have a value
placed upon them and transactions with government which cannot
be distinguished from the normal trading transactions of the
enterprise.
35. Examples of assistance that
cannot reasonably have a value placed upon them are free
technical or marketing advice and the provision of guarantees.
An example of assistance that cannot be distinguished from the
normal trading transactions of the enterprise is a government
procurement policy that is responsible for a portion of the
enterprise's sales. The existence of the benefit might be
unquestioned but any attempt to segregate the trading
activities from government assistance could well be arbitrary.
36. The significance of the
benefit in the above examples may be such that disclosure of
the nature, extent and duration of the assistance is necessary
in order that the financial statements may not be misleading.
37. Loans at nil or low interest
rates are a form of government assistance, but the benefit is
not quantified by the imputation of interest.
38. In this Standard, government
assistance does not include the provision of infrastructure by
improvement to the general transport and communication network
and the supply of improved facilities such as irrigation or
water reticulation which is available on an ongoing
indeterminate basis for the benefit of an entire local
community.
Disclosure
39. The following matters
should be disclosed:
(a) the accounting policy
adopted for government grants, including the methods of
presentation adopted in the financial statements;
(b) the nature and extent of
government grants recognised in the financial statements and
an indication of other forms of government assistance from
which the enterprise has directly benefited; and
(c) unfulfilled conditions
and other contingencies attaching to government assistance
that has been recognised.
Transitional
provisions
40. An enterprise adopting the
Standard for the first time should:
(a) comply with the
disclosure requirements, where appropriate; and
(b) either:
(i) adjust its financial
statements for the change in accounting policy in
accordance with IAS 8, net profit or loss for the period,
fundamental errors and changes in accounting policies; or
(ii) apply the accounting
provisions of the Standard only to grants or portions of
grants becoming receivable or repayable after the
effective date of the Standard.
Effective date
41. This International
Accounting Standard becomes operative for financial statements
covering periods beginning on or after 1 January 1984.
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