How does the performance model under UK GAAP recognize grants?

The performance model under UK GAAP recognizes grants when performance-related conditions have been met. This approach aligns the recognition of income with the period in which the entity fulfills the stipulations set out in the grant agreement.

This means that if a grant is contingent upon the completion of certain tasks, or meeting specific performance criteria, it can only be recognized as income once those conditions are satisfied. This principle ensures that the financial statements reflect a true and fair view of the organization's financial position and performance, accurately matching income with the expenses that the grant is intended to support.

In contrast, recognizing the grant at the time of receiving it could misrepresent the financial performance of the entity, as it may not reflect any obligations or conditions that need to be met, leading to potential misstatements in income. Similarly, recognition based on incurred expenses or on a quarterly basis does not align with the performance-based criteria that the performance model emphasizes, which focuses on the completion of specific tasks or conditions rather than the mere timing of cash flow or expenditure recognition.