Government grants as defined by IAS 20 are assistance by the government in the form of transfers of resources to an entity in return for past or future …show more content…
There are two methods to account for the grant relating to the land. The first method recognises the grant as deferred income that is recognised in profit or loss on a systematic basis over the useful life of the asset. The other method deducts the grant in calculating the carrying amount of the asset. The grant is recognised in profit or loss over the life of a depreciable asset as a reduced depreciation expense. Essentially both methods achieve the same result and so either method may be appropriate.
Based on the conditions of the government grant scheme, all of these commitments will enforce the group’s compliance with sustainability in South Africa and compliance with various legislation relating to the development of skills in South Africa and this will prove to be beneficial for the company in terms of improving its balanced score card rating and complying with BEE. This is essential to ensure that future lucrative contracts with government are secured.
The subsequent measurement of the farm land shall be in accordance with either the cost model or the revaluation model. In terms of the cost model, the land will carried at cost, with no depreciation being recognised as land is a non-depreciable asset. In terms of the revaluation model, the land shall be