The Malaysian Accounting Standards Board (MASB) published for public comment an exposure draft on accounting for government aid, MASB ED 36 and invites members of professional accountancy bodies, public listed companies, regulators, individuals and other interested organisations to comment on the draft.
MASB Chairman, Raja Datuk Arshad Raja Tun Uda said, "The proposed Standard requires government grant to be recognised as income over the periods to match them with the related costs during which they are intended to compensate. Government grants are receipts from a source other than shareholders, therefore, they should not be credited directly to shareholder's interest but should be recognised as income in the appropriate periods."
He added, "Although the proposed Standard permits certain government grants to be recognised as extraordinary item, the position may need to be revisited in view of the development at the international level. The International Accounting Standards Board in its recent exposure draft has proposed to prohibit the presentation of items of income and expense as extraordinary item."
For non-monetary government grant, such as land and other resources, an enterprise should assess the fair value of the non-monetary asset and to account for both the grant and asset at that fair value instead of at nominal value. Raja Datuk Arshad said, "This fair value approach is taken as it provides greater relevance, comparability and understandability as a measurement of future economic benefits expected from the non-monetary assets."
Raja Datuk Arshad urged interested parties to avail themselves the opportunity to comment on this proposed Standard. Comments on the Exposure Draft are invited by 15 October 2002. MASB ED 36 is available free of charge at:
Malaysian Accounting Standards Board
Suites 5.01-5.03, 5th Floor
No. 338, Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur
Tel: 03 - 2715 9199
Fax: 03 - 2715 9212
Alternatively, MASB ED 36 is also available on the MASB website at www.masb.org.my/indexedo.htm. The public may also provide their comments electronically through the ED Online website.
Government aid comprises both government grant and government assistance. MASB ED 36, Accounting for Government Aid prescribes the accounting treatment for government grants and the related disclosures of government grants and other forms of government assistance. A government grant should be recognised as income on a systematic and rational basis over the periods to match them with the related costs. When a government grant takes the form of a transfer of a non-monetary asset, both the grant and the asset should be accounted for at fair value. This proposed Standard also provides guidance on the accounting treatment for revocation of government grants and guidance on the presentation of grants related to income and grants related to assets.