Under IAS 20/AASB 120, Accounting for Government Grants, it is true that:

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Under IAS 20/AASB 120, a government grant relating to an asset may be presented as a reduction in the carrying amount of the asset concerned. This means that the grant is recognized as a gain or income and the carrying amount of the asset is reduced accordingly. This method is known as the deferred income method. Choice A is incorrect because government grants relating to assets are not credited directly to equity. Choice B is incorrect because a government grant relating to income is recognized over the period necessary to match them with the related costs that they are intended to compensate. They are not recognized in full at the time of receipt. Choice C is incorrect because subsidies for agricultural activities are discussed in IAS 41 and not in the appendix to IAS 20/AASB 120.

Under IAS 20/AASB 120, Accounting for Government Grants, It Is