On 13 March 2012, the International Accounting Standards Board issued Government Loans (Amendments to IFRS 1). The amendments have an effective date of 1 January 2013, but earlier adoption is permitted.
The amendments add an exception to the retrospective application of IFRSs to require that first-time adopters apply the requirements in IFRS 9 Financial Instruments and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to IFRSs.
This means that first-time adopters shall not recognise the corresponding benefit of the government loan at a below-market rate of interest as a government grant.
However, entities may choose to apply the requirements of IFRS 9 and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. These amendments give first-time adopters the same relief as existing preparers of IFRS financial statements.
