What is Income Grant?
An income grant is a government grant given to compensate for expenses or losses already incurred or to provide immediate financial support. Under IAS 20, income grants are recognized in profit or loss over the periods in which the related expenses are recognized.
How It Works
- Identify the related expenses the grant compensates.
- Recognize the grant in profit or loss over the same periods.
- Present either as other income or as a deduction from the related expense, consistently.
- Disclose the nature and conditions of the grant.
Saudi Context
Saudi entities receiving Human Resources Development Fund (HRDF) wage subsidies for Saudi national employees apply IAS 20 to recognize the subsidy over the relevant payroll periods.
Example
A SAR 1.2 million HRDF subsidy covering one year of Saudi national wages is recognized as SAR 100,000 per month, matched against the related salary expense.