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Advisor(s)
Abstract(s)
In Portugal, the general adoption of the International Accounting Standards was made under the SNC-Accounting Normalization System, in 2010. The SNC carried out new bookkeeping rules concerning the way government grants related to assets. While in the past these grants were treated as liabilities during the economic life of the asset, now the Accounting and Financial Reporting Standards n.º 22 (NCRF n.º 22) repor
t them as an item of equity capital. This procedure is an exception to the rules stated in IAS.
The aim of this study is to analyze whatever the accounting for government grants impact on equity capital and, consequently on financial ratios, of Portuguese companies in the agricultural sector. We collect financial information of 2009, from 124 enterprises operating in the agricultural sector, which had re
port subsidies for investment. The sample was draw from SABI database. Our model used the amounts repor
ted as “Accrued and deferred income - Income taxes - Subsidies for Investments” (old bookkeeping rules), at 31/12/2009, and estimates the values of the equity capital and financial ratios. We found a positive
variation in equity capital, which corresponds to an increase of nearly 4.5%. Consequently it caused an increase of 4.7% in theindicator of financial autonomy, and also had a positive impact on the solvency ratio, with an average variation greater than 11%. Our research shows that the new bookkeeping rules have important implication in the values of some financial ratios of Portuguese companies. Even though the new bookkeeping procedures are different from those stated in IAS nº 20, Portugal opted by the same rules as those that Spain and France follow since long time ago and thus Portuguese companies are in equal competition condition to apply European Programs for financial support of investment projects, since it requires some minimum valuesat certain ratios.
Description
Keywords
Grants Equity Financial autonomy Solvency Agricultural companies
Citation
PEREIRA, José Manuel; SILVA, Amélia Ferreira da; DOS SANTOS, Maria José Palma L. - The impact of accounting for government grants related to fixed assets on equity capital: evidences from a Portuguese sample of agricultural companies. In: Proceedings of the 2nd Global Conference on Business Economics, Management and Tourism. Amsterdam: Elsevier, 2015. pp. 1401-1404
Publisher
Elsevier