How accounting for investment subsidies influences financial performance: an empirical analysis of IAS 20 and Czech accounting legislation

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F60076658%3A12510%2F24%3A43908510" target="_blank" >RIV/60076658:12510/24:43908510 - isvavai.cz</a>

Result on the web

<a href="https://www.efri.uniri.hr/upload/1/10-Zden%C4%9Bk_et_al-2024-2.pdf" target="_blank" >https://www.efri.uniri.hr/upload/1/10-Zden%C4%9Bk_et_al-2024-2.pdf</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.18045/zbefri.2024.2.1" target="_blank" >10.18045/zbefri.2024.2.1</a>

Result language

angličtina

Original language name

How accounting for investment subsidies influences financial performance: an empirical analysis of IAS 20 and Czech accounting legislation

Original language description

Our paper focuses on investment subsidies and the impact of accounting methods on financial ratios. Accounting for investment subsidies in Czechia is subject to national legislation and international accounting standards, such as the IAS20. This standard offers two options for capturing subsidies on assets – as deferred income or by reducing the book value. Czech accounting legislation allows only the second method mentioned. The essence of our article is to evaluate to what extent the alternative accounting of investment subsidies using accruals would be reflected in the financial ratios. The dataset consists of 277 enterprises that received an investment subsidy. Enterprises are from the agricultural sector that is subsidised for many reasons. The analysis is focused on testing the differences in the financial ratios according to financial statements compiled according to Czech accounting legislation and based on accounting allowed by IAS 20. The results indicate a higher significance of the subsidy for smaller companies. The impact of the change in the accounting procedure on financial ratios was statistically significant; on average, their values decreased by 2.8%. For the smallest businesses, the transition to accounting for subsidies using deferred income would be the most significant, with an average reduction of 5.5%.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50205 - Accounting

Project

—

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2024

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Zbornik Radova Ekonomskog Fakulteta u Rijeci-Proceedings of Rijeka Faculty of Economics

ISSN

1331-8004

e-ISSN

1846-7520

Volume of the periodical

42

Issue of the periodical within the volume

2

Country of publishing house

HR - CROATIA

Number of pages

24

Pages from-to

509-532

UT code for WoS article

001394683800010

EID of the result in the Scopus database

2-s2.0-85218253256