Global Standards for the world economy

Tuesday 23 July 2019

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The Interpretations Committee will continue its discussions at a future meeting

 22 March 2016


IAS 20 Accounting for Government Grants and Disclosure of Government Assistance—Accounting for recoverable cash payments (Agenda Paper 7)

The Interpretations Committee continued its discussions on how to account for a cash payment received from a government to help finance an entity’s research and development project. The cash payment received from the government is repayable in cash if the entity decides to exploit and commercialise the results of the research phase of the project. If the entity decides not to exploit and commercialise the results of the research phase, the cash payment is not repayable and, instead, the entity must transfer to the government the rights to the research.

The Interpretations Committee considered the comments received on its tentative agenda decision published in November 2015 and concluded that, in the fact pattern submitted, the cash payment received from the government gives rise to a financial liability for the entity. The Interpretations Committee also decided to remove from the tentative agenda decision any reference to the arrangement also potentially meeting the definition of a forgivable loan.

The Interpretations Committee directed the staff to perform further analysis on how an entity accounts for any difference between the cash payment received from the government and the carrying amount of the financial liability at initial recognition.


Next steps

The Interpretations Committee will consider this issue further at a future meeting.