Natalie Company purchased a machine for P6,600,000 on January 1, 2021 and received a government grant of P600,000 towards the capital cost. The policy is to treat the grant as reduction in the cost of asset. The machine is to be depreciated on a straight light basis over 10 years with a residual value of P500,000. On January 1, 2023, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2021? What is the depreciation for 2023?

Natalie Company purchased a machine for P6,600,000 on January 1, 2021 and received a government grant of P600,000 towards the capital cost. The policy is to treat the grant as reduction in the cost of asset. The machine is to be depreciated on a straight light basis over 10 years with a residual value of P500,000. On January 1, 2023, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2021? What is the depreciation for 2023?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter15: Property Transactions: Nontaxable Exchanges

Section: Chapter Questions

Problem 46P

See similar textbooks

Similar questions

Natalie Company purchased a machine for P6,600,000 on January 1, 2022 and received a government grant of P600,000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight line basis over ten years with a residual value of P500,000. On January 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What is the depreciation for 2022? A. 610,000 B. 600,000 C. 660,000 D. 550,000 2. What is the depreciation for 2024? A. 610,000 B. 600,000 C. 780,000 D. 730,000
1. Patriotic Company purchased a machine for P6,000,000 on January 1, 2019, and received a government grant of P600,000 toward the asset cost. The accounting policy is to treat the grant as a reduction in the cost of the asset. The machine is to be depreciated on a straight-line basis over 10 years with a residual value of P500,000. On January 1, 2021, the grant becomes fully repayable because of noncompliance with conditions. What is the depreciation for 2019? What is the depreciation for 2021? What is the carrying amount of the machinery at the end of 2021? What is the depreciation for 2022?
Keshia Company purchased a machine for P3,000,000 on January 1, 2022. The entity received a government grant of P500,000 in respect to this asset. The policy is to depreciate the asset over five years on a straight line basis and to treat the grant as deferred income. On January 1, 2024, the grant became fully repayable because of noncompliance with conditions. What is the loss on repayment of grant in 2024? A. 500,000 В. 300,000 С. 200,000 D. 100,000
Racquel Company purchased a machine for P3,000,000 on January 1, 2020. The entity received a government grant of P500,000 in respect of this asset The policy is to depreciate the asset over 5 years on a straight line basis and to treat the grant as deferred income On January 1, 2022, the grant became fully repayable because of noncompliance with conditions Determine: 1.) Deferred Grant Income reported in the company's statement of financial position as of December 31, 2021, if deferred income approach was used. 2.) Machinery - net reported in the company's statement of financial position as of December 31, 2021, if deduction from asset approach was used. 3.) Depreciation expense reported in the statement of profit of loss for 2022, if deduction from asset approach was used. 4.) Amount of loss on noncompliance with the conditions of the grant.
Maroon Company acquired a rice milling machine to be used by farmers for P 900,000 on January 1, 2020. The company received a government grant of P81,000 in respect of this asset. It is the policy of the entity to depreciate the asset over 4 years on a straight Ine basis and to treat the grant as deferred income.QUESTION 1:What should be the carrying amount of the machine as of December 31, 2021?QUESTION 2:What is the deferred income balance at December 31, 2021?QUESTION 3:What is the realized income from government grants in 2022??
On January 1, 2021, Raquel Company purchased a machine for 3,000,000. The entity received a government grant of 500,000 in respect of this asset. The policy is to depreciate the asset over 5 years on a straight line basis and to treat the grant as deferred income. On January 1, 2023, the grant became fully repayable because of non compliance with conditions. Required: Prepare journal entries for 2021, 2022 and 2023.
On January 1, 2020, ABC corporation received P8,000,000 from the City of Caloocan to construct an overpass in the intersection of Camarin. The cost of the overpass is P25,000,000, with a useful life of 20 years. How much is the carrying value of the overpass as of December 31, 2021 assuming ABC used the deduction to asset approach?
ABC Company acquired a rice milling machine to be used by farmers for P 900,000 on January 1, 2020. The company received a government grant of P 81,000 in respect of this asset. It is the policy of the entity to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. 1) What should be the carrying amount of the machine as of December 31, 2021? P 409,500 P 675,000 P 450,000 P 490,500 2) What is the deferred income balance at December 31, 2021? P 60,750 P 81,000 P 0 P 40,500 3) What is the realized income from government grants in 2022?? P 81,000 P 40,500 P 60,750 P 20,250
On 1 April 2016, Gidimadjor Ltd received a government grant of GH¢8 million towards the purchase of new plant with a gross cost of GH¢64 million. The plant has an estimated life of 10 years and is depreciated on a straight-line basis.One of the terms of the grant is that the sale of the plant before 31 March 2020 would trigger a repayment on a sliding scale as follows:Sale in the year ended: Amount of repayment31 March 2017 100%31 March 2018 75%31 March 2019 50%31 March 2020 25%Accordingly, the directors propose to credit to the statement of profit or loss GH¢2 million (GH¢8 million x 25%) being the amount of the grant they believe has been earned in the year to 31 March 2017.Gidimadjor Ltd accounts for government grants as a separate item of deferred credit in its statement of financial position. Gidimadjor Ltd has no intention of selling the plant before the end of its economic life.Required:Advise, and quantify where possible, how the above items should be treated in Gidimadjor…
• Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated Depreciation on the asset is $1,200,000. Based on technological changes, Hall decides to test the asset for impairment. Estimated undiscounted future cash flows from the project are $1,500,000. The Fair Value of the asset is estimated at $982,288. The journal entry related to this asset will include: Credit to Accumulated Depreciation of $300,000. O Debit to Loss of $817,712. O Debit to Loss of $851,444. O No impairment necessary.
Rigg Owusu Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. Account for this grant under the netting off method.
on july 2018, neha received a $2m grant towards a new plant which will last 5 years. the grant must be repaid if neha sells the asset within 4 years. neha uses the deferred income method in relation to capital grants. what amoynt will be shown in the non current liabilities as at 31 december 2018