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Question A. Accounting for Government Grant (IAS 20) has two approaches when it comes to its recognition period in accounting treatment. Briefly explain the two approaches.
Question B. MASOA Company ltd received a grant of GH¢150 million to install and run a windmill in an economically backward area. MASOA company ltd has estimated that such a windmill would cost GH¢250 million to construct. The secondary condition attached to the grant is that the entity should hire labor in the local market (i.e., from the economically backward area where the windmill is located) instead of employing workers from other parts of the country. It should maintain a ratio of 1:1 local workers to workers from outside in its labor force for the next five years. The windmill is to be depreciated using the straight-line method over a period of ten years.
Required:
i. On what Criteria should MASOA based on in order to recognize the grant.
ii. Advice MASOA Company on the treatment of this grant in accordance with IAS 20.
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