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COVID-19 & Government grants: what to recognise?

COVID-19 & Government grants: what to recognise?

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Governments around the world are responding to the COVID-19 coronavirus outbreak by implementing a variety of measures to provide relief to companies and stimulate the economy. Government assistance that meets the definition of a government grant is accounted for under the specific requirements of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.

Government grants may come in many forms (e.g. companies may receive grants in the form of forgivable loans, below-market interest rate loans etc.). A company recognises a government grant when it has reasonable assurance that it will comply with the relevant conditions and the grant will be received. If the conditions are met, then a company recognises government grants in profit or loss on a systematic basis and in line with its recognition of the expenses that the grants are intended to compensate.

Actions for management:

  • Monitor government actions and legislation to identify all assistance that may meet the definition of a government grant.
  • Develop accounting policies and procedures for government grants.
  • Consider expanding disclosures on the accounting policies for government grants and the impact of grants and other assistance on the financial statements. [IAS 20.39]

Learn more: https://home.kpmg/xx/en/home/insights/2020/03/covid-19-government-assistance-4a.html

© 2020 KPMG Tanácsadó Kft., a Hungary limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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