How should a grant with multiple conditions be treated according to IAS 20?

In accordance with IAS 20, grants with multiple conditions should be treated in a manner that reflects the specific terms and purposes for which the grant was made. When a grant has multiple conditions, it should be split and allocated to the different costs associated with meeting each of those conditions. This approach allows for a more accurate representation of the financial impact of the grant over the period in which the conditions are fulfilled.

Recognizing the grant fully at once would not accurately match the income to the expenses incurred in fulfilling the conditions, which is essential for presenting a true and fair view of the organization's financial health. Similarly, deferring the entire grant until all conditions are met could lead to a significant lag in recognizing income, which would not reflect the ongoing benefits the grant may provide over time. Writing off the grant as an expense would misrepresent the purpose of the funding and disregard the potential benefits expected from complying with the conditions.

By splitting and allocating the grant to specific costs, the financial statements will provide clearer insight into how effectively the organization is utilizing the grant funds in relation to the conditions specified. This aligns with the accrual basis of accounting, ensuring that income is recognized when it is earned and expenses are recorded in the same period as the related income.