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SFAS No.
29 Accounting for Government Grants and Disclosure of
Government |
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Assistance |
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 Status |
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Revised by the
Financial Accounting Standards Committee In Taiwan on 24 June 1999
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Summary |
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The purpose of this Statement is to establish
accounting standards for government grants |
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and
disclosure of government assistance. |
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Because government grants are not resources from stockholders, it is
inappropriate to |
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directly credit stockholders’ equity. Instead, it should be
recognized as revenues in |
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appropriate periods. Moreover, since an enterprise generally must
meet the various |
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conditions for government grants and to fulfill the related
obligations, therefore, according to |
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the
matching principle, the government grants received by an enterprise
along with the |
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related costs incurred must be recognized concurrently.
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Recognition
of government grants |
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An
enterprise receiving government grants should not recognize such
grants in its |
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financial
statements until it has reasonable assurance that both of the
following conditions will |
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be
met: |
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(a)
the enterprise can comply with the terms related to the government
grants; and, |
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(b) the
grants will be received. |
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The
government grants that are in accordance with this Statement should
be recognized as revenue in a rational and systematic way over the
periods when related costs are expected to incur, rather than be
directly credited to retained earnings. But if there is no rational
and systematic way available to recognize such government grants,
then the amount of government grants should be recognized in full
when received. |
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The receipt of non-monetary government grant should be measured at
its fair value. |
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Government
grants related to assets |
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The government grants related to assets that are in accordance with
this should be |
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recognized as deferred revenue. If the government grants are
related to depreciable assets, |
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they
should be recognized as revenue over the economic lives and in the
proportions in which |
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depreciation expenses on those assets are charged. |
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If
the government grants are not related to depreciable assets and if
the government |
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require an enterprise to fulfill certain obligations, the enterprise
should recognize such |
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government grants over the periods and in the proportions in which
the related costs are |
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incurred by the enterprise to fulfill the obligations. For example,
a government donates a |
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piece of land to an enterprise and requires the enterprise to
construct a building on this land. |
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Such
government grant should be recognized as revenue over the economic
life of the |
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building. |
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Government
grants related to income |
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The government grants related to income that
are in accordance with this Statement |
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should be recognized as revenue in a rational and systematic way
over the periods when the |
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related costs are expected to be incurred. However, the government
grants that are not |
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realized yet should be presented as deferred revenue. |
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If
government grant is intended to compensate for the expenses or
losses that an |
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enterprise has incurred, or are intended as immediate financial
support, and if the enterprise |
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need
not incur any future related costs, the enterprise can recognize the
government grant as |
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revenue in full amount when it has reasonable assurance that the
government grant can be |
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received. |
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Repayment
of government grants |
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When a government grant related to an asset becomes repayable, it
should be debited to |
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deferred government grant revenue. The cumulative under-recognition
of depreciation |
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expense or over-recognition of grant revenue in prior years due to
government grant should |
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be
immediately recognized in full as an expense upon repayment of such
government grant. |
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When a government grant related to income becomes repayable, it
should be first applied |
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against any unamortized deferred government grant revenue. If the
repayment exceeds |
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deferred revenue or if there is no deferred revenue, the amount of
repayment over deferred |
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revenue should be immediately recognized as an expense. |
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Other
forms of government assistance
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Government assistance of which value cannot be reasonably measured
and transactions |
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with
government due to government policies need not be recognized as
revenue or a |
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reduction of expense by an enterprise. Nevertheless, they should be
disclosed in the |
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footnotes to financial statements. |
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Government loans at zero or low interest rate are a form of
government assistance and |
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should be disclosed in the footnotes to financial statements. But
the benefit of imputed |
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interest may not be recognized. |
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This Statement also specifies disclosures about government grants
and government |
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assistance. |
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 Effective
date
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This Statement becomes effective for financial statements for the
fiscal year ending on and |
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after December 31, 2000. Earlier adoption is allowed. |
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