How are grants relating to depreciating assets released to profit or loss?

Grants related to depreciating assets are released to profit or loss in a manner consistent with the recognition of the associated depreciation expense over the useful life of the asset. This approach follows the matching principle of accounting, where income and expenses are recognized in the same period. By allowing the grant to be recognized gradually alongside the depreciation expense, the financial statements reflect the ongoing benefit of the grant as it contributes to the overall operational capability of the entity during the asset's useful life.

This method ensures that the financial impact of the grant is aligned with the usage of the asset it supports, thereby providing a realistic view of the entity's performance. This approach enhances the clarity and accuracy of profit or loss reporting, reflecting the economic reality of the asset's contribution to the entity over time.