What is a valid presentation method for grants related to assets?

Grants related to assets can be presented in two primary ways under accounting standards: as deferred income or as a reduction in the carrying amount of the asset. When presented as deferred income, the grant is recognized as a liability on the balance sheet until the conditions for the grant are fulfilled. Once the conditions are met, the grant is recognized as income over the life of the asset, often on a systematic basis.

Alternatively, the grant can be presented as a reduction in the carrying amount of the related asset. This method directly decreases the asset's book value, which results in lower depreciation expenses over the useful life of the asset. By using this method, the income statement reflects only the net cost of the asset, rather than showing the gross asset and the grant income separately.

Choosing this approach aligns with the principles found in International Financial Reporting Standards (IFRS) and other relevant accounting frameworks, which emphasize the need for a clear reflection of the economic reality behind asset-related grants. This presentation method ensures that the financial statements accurately represent the company's position and performance, providing users with a clearer understanding of how much the grant has effectively reduced the asset's cost.