When an asset acquired through a government grant is recorded on the books, equity will increase by the cost of the asset.

Question

Quizplus · Accepted Answer

When an asset acquired through a government grant is recorded, it does not increase equity directly. Instead, the asset is recorded at its fair value, and the grant may be recognized either as deferred income (a liability) or directly in equity, depending on the accounting policy chosen. However, the initial recognition typically does not increase equity by the cost of the asset.

When an Asset Acquired Through a Government Grant Is Recorded