Why should the receipt of a government grant not be credited immediately to the income statement?
A)It ignores the matching & prudence concepts
B)It ignores the matching & objectivity concepts
C)It ignores the prudence & objectivity concepts
D)It ignores the prudence & continuity concepts

Question

Quizplus · Accepted Answer

Crediting a government grant immediately to the income statement would ignore the matching concept, as the grant may be intended to cover future expenses or costs. It would also ignore the prudence concept, as the income would not have been earned yet and may not ultimately be received. Therefore, it is more appropriate to defer recognizing the grant until it can be matched with related expenses or until it is reasonably certain that the grant will be received.

Why Should the Receipt of a Government Grant Not Be