How are grants recognized when an entity complies with attached conditions?

Grants are recognized in financial statements when an entity complies with the attached conditions, aligning with the principles outlined in IAS 20, "Accounting for Government Grants and Disclosure of Government Assistance." IAS 20 establishes criteria for recognizing government grants when there is reasonable assurance that the entity will comply with the conditions attached to the grant and that the grant will be received.

This means that the grant is recognized as income over the periods that it is intended to compensate for, or when the related costs have been incurred, reflecting the matching principle in accounting. The financial statement reporting accurately indicates the grant's income at the appropriate time, ensuring that it aligns with performance and expenditure recognition.

Other options do not reflect the proper timing for grant recognition. Just being approved or receiving full funding does not guarantee that all conditions have been met, and reporting in financial statements without considering compliance would not accurately represent the entity's financial position or performance tied to the grant conditions set forth in IAS 20.