PAS 20 ACCOUNTING FOR GOVERNMENT GRANTS

1. Under PAS 20, a government grant shall be recognized when

A. the entity has complied with all the conditions attaching to the grant
B. the entity has complied with all the conditions attaching to the grant and the grant
will be received
C. there is reasonable assurance that the entity will comply with the conditions
attaching to the government grant
D. there is reasonable assurance that the entity will comply with the conditions
attaching to the government grant and the grant will be received

2. The Account deferred grant revenue is generally classified as

A. revenue C. a noncurrent liability

B. other income D. a separate component of shareholders equity

3. If the cost of the asset is recorded net of government grant

A. asset will likely be understated

B. equity will likely be overstated
C. liabilty will likely be overstated
D. net income will likely be understated

4. which of the following is true about government grant?

A. grant related to an asset is accounted for either as deferred income or deduction

from the carrying amount
B. grant related to income is presented as other income, separate line item or a
deduction from related expense
C. a forgivable loan from the government is treated as government grant where
there is reasonable assurance that the entity will meet the terms for the
forgiveness of the loan
D. all of these statement is true about government grant

5. Which of the following statements is incorrect in relation to government grant?

A. in respect of loan from the government grant at xero interest rate, an imputed
interest charge should be made in profit or loss
B. any adjustment needed when government grant becomes repayable is account
for as a change in accounting estimate
C. where conditions apply to a government grant, it should only be recognized when
there is reasonable assurance that the conditions will be met
 D. a government grant that becomes receivable as compensation for losses already
incurred should be recognized as income of the period in whihc it becomes
receivable

6. which can be considered a government assistance?

A. imposition of trading constraints on competitors

B. improved facilities, such as irrigation or water supply
C. freetechnical or marketing advice and provision of guarantee
D. infrastracture by improvement to the genereal transport and communication
network

7. Government grant in recognition of specific cost is recognized as income

A. over the same period as the relevant expense

B. immediately
C. over a maximum of 5 years using straight line
D. over a maximum of 5 years using sum of digits

8. Government grant related to ​depreciable asset​ is usually recognized as income

A. immediately
B. over the useful life of the asset using straight line
C. over the useful life of the asset using sum of years digits
D. over the useful life of the asset and in proportion to the depreciation of the asset

9. Government grant related to​ ​nondepreciable asset​ that requires fulfillment of certain
conditions

A. should not be recognized as income

B. should be recongnized as income immediately
C. should be recognized as income over 40 years
D. should be recognized as income over the periods which bear the cost of meeting
the conditions

10. Repayment of ​grant related to income ​shall be

A. recognized as component of other comprehensive income

B. charged to retained earnings
C. expensed immediately
D. applied first against the deferred income balance and any excess shall be
recognized immediately as an expense.
11. Repayment of ​grant related to an asset ​shall be recorded by

A. increasing the carrying amount of the asset if the deduction approach is used
B. recognizing as expense the cumulative additional in the absence of the grant if
the deduction approach is used
C. reducing the deferred income balance to zero if the deferred income approach is
used
D. all of these

12. The amount of benefit in zero interest government loan is measured as the difference
between

A. Face amount and present value of loan

B. face amount and fair value of loan
C. fair value and present value of loan
D. face amount and implied interest

13. Which disclosure is not required for government grant

A. the accounting policy adopted for government grant including method of

presentation
B. unfulfilled conditions and other contigencies attaching to government assistance
C. the name of the government agency that gave the grant along with the date of
sanction of the grant by the government agency and the date when cash was
received in case of monetary grant
D. the nature and extent of government grant recognized and an indication of other
form of government assistance from which the entity has directly benefited

14. It is an action by a government designed to provide an economic benefit specific to an

entity and for which the government cannot reasonably place a value

A. government grant C. government takeover

B. government assistance D. subvention

15. A forgivable loan from the government or the benefit of a government loan at NIL or
below market interest rate is accounted for as

A. Government grant
B. Governmetn Assistance
C. Both Governmant Grant and Governmeng Assistance
D. Neither of the two