SIC 10: GOVERNMENT ASSISTANCE - NO SEPECIFIC RELATION TO OPERATING ACTIVITIES

In most of the countries of the world, governments are providing some special assistance and support to business entities to support and encourage them to continue their business operations smoothly. However, with government assistance there comes certain terms and conditions that are to be complied with by business entities in order to receive government assistance and support. Examples of the terms and conditions imposed by governments on business entities could be to operate in a specific locality and industries or to hire more employees to reduce unemployment.


Confusion arises sometimes that how to treat the long term support and assistance of the government to business entities. However, SIC 10 provides guidance that such long-term support and assistance by the government to business entities meeting the criteria and definition of the government grant as mentioned in IAS 20- Accounting for government grants and disclosures of government assistance. Therefore, such government support and assistance shall be treated as a government grant and shall not be credited to the shareholders' interest.