Part 6- Government Grants

Under current Irish & UK GAAP, government grants are accounted for using the accruals basis. This means that the grant income is netted off against the related expenditure when it is incurred (effectively netting off the expenditure with the grant income). FRS102 introduces an accounting policy choice between the existing “accrual model” or the “performance model”. The accrual model is similar to the model used in current Irish & UK GAAP. The performance model requires that; (a) A grant that does not impose specified future performance-related conditions on the recipient is recognised in income when the grant proceeds are received or receivable. (b) A grant that imposes specified future performance-related conditions on the recipient is recognised in income only when the performance-related conditions are met. (c) Grants received before the revenue recognition criteria are satisfied are recognised as a liability. The changes under FRS 102 will give entities a clear choice to make, do they stick with their current accounting policy or do they opt for the new “performance model”.

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