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AASB 120 - Accounting for Government Grants and Disclosure of Government Assista
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Currency of material  
This material was last updated when this standard was released in July 2004.  
 
A list of the omnibus amending standards issued up until July 2007 that have affected this standard since this date is included in the following table. The table also contains the date when the relevant changes become operative. 
 
Omnibus amending standards are available on the AASB website as are compiled standards incorporating omnibus amendments as soon as they are completed by the AASB. 
 
Details of the changes made by each omnibus are summarised in ANT and Charter’s “The Panel” as they are released. For a quick overview of the new material applying at 30 June 2007 click here.  

 
Text of the Standard 
Summary 
AIFRS compared to IFRS and old AGAAP 
Interpretations and guidance 
Questions and answers 
Articles 
 
 
Summary of AASB 120 
 
The main requirements of AASB 120 are: 
  • Does not apply to not-for-profit entities; 
     
  • Initial recognition of government grants (including non-monetary grants at fair value) cannot occur until there is reasonable assurance that: 
    i) the entity will comply with the conditions attached to the grants; and 
    ii) the grants will be received. 
     
  • Government grants must be recognised as income over the periods necessary to match them with the related costs they are intended to compensate on a systematic basis; 
     
  • Government grants receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support must be recognised as income in the period they become receivable; 
     
  • Asset-related grants (including non-monetary grants at fair value) must be presented in the balance sheet by setting up the grant as deferred income; 
     
  • Income-related grants must be presented as a credit in the income statement; and 
     
  • A government grant that becomes repayable is accounted for prospectively as a revision to an accounting estimate under AASB 108 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ with the additional requirements: 
    i) asset related grant – reduce the deferred income balance  
    ii) income grant – recognised immediately as expense 

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