Final answer:
Deferred Grant Revenue is classified as a non-current liability because it represents funds for which revenue has not yet been earned and conditions have not been satisfied, making it an obligation owed back to the grantor.
Step-by-step explanation:
The question is about how to classify the account Deferred Grant Revenue in financial reporting. Deferred Grant Revenue is commonly reported as a non-current liability on the balance sheet. It is an amount that represents funds received by an entity, for which revenue recognition criteria have not yet been met. As the funds are technically owed back to the grantor until certain conditions are satisfied, this account is not immediately recognized as revenue.In accounting, deferred revenue is considered a liability because it refers to income that has not been earned, thus, the good or service has not yet been provided. To recognize it prematurely as revenue would misstate actual financial performance. Typically, as the entity delivers the services or meets the conditions of the grant, portions of this deferred revenue will be recognized as revenue over time, which is in accordance with the accrual basis of accounting.In conclusion, Deferred Grant Revenue is best classified as a non-current liability until the criteria for revenue recognition has been satisfied.