XYZ Company received a P2,800,000 govemment grant for a factory building it purchased in January 20x1. The grant will be treated as deferred income under the company's policy. The building was purchased for P17,000,000 by the company. The building has a ten-year useful life and no residual value. Because of certain violations with the grant's requirements, the entire sum of the government grant became repayable on January 1, 20x3.
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- The NCR Company purchased a varnishing machine for P150,000 on January 1, 2017.The company received a government grant of P13,500 in respect of this asset. Company policy was to depreciate the asset over 4 years on a straight-line basis and to treat the grant as deferred income.Under PAS20 Government grants and government assistant, what should be the carrying amounts of the machine and the deferred income (DI) balance at December 31, 2018? a. Carrying amount – P75,000 ; DI balance – P6,750 b. Carrying amount – P112,500 ; DI balance – P10,125 c. Carrying amount – P81,750 : DI balance – P6,750 d. Carrying amount – P75,000 ; DI balance – P13,500Tarhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for 12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant. Required: Prepare journal entries assuming the government grant is accounted for using: Deferred income approach Deduction from asset approachLany Co. received a government grant of P2,000,000 related to a factory building that it purchased in January 2022. The entity acquired the building from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2025, 50% of the amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: 1. Compute the government grant income recognized in 2022. 2. Assuming the deferred income approach is used, compute the loss recognized due to the repayment of the government grant. <
- Tarhata Company received government grant of P2,000,000 related to a factory building that is purchased in January 2019. Tarhata Company acquired the building from an industrialist identified by the government. If Tarhata Company did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. Tarhata Company purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2021, the entire amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: Prepare all journal entries assuming the government grant is accounted for using: 1. Deferred income approach 2. Deduction from asset approachBright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000The following allotment and NCA were received by Agency MNL from DBM: P9 million for capital outlay; P13 million for maintenance and other operating expenses; P14 million for personal services. The agency is using an old building for its office. The left wing of this building is no longer being used due to an earthquake that happened years ago which made it unsafe for use. However, engineers and architect were hired to fix the left wing in order for it to be safe for use once again. The engineers and architects are predicting that the left wing is safe for use for the next 10 years assuming that no more strong earthquakes will be experienced. Cost of materials for this project amounted to P13.4 million while labor cost amounted to P11.5 million. The right wing also needs to be repainted. The agency bought paints totaling P3,700,000. Once the renovation was done, all offices were refurnished. New furniture and fixtures and equipment were purchased amounting to P5 million. Office…
- On january 1, 2022, Sarah Company purchased a machine for 8,500,000 and received a government grant of 1,000,000 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 5 years with a residual value of 500,000. On january 1, 2024, the grant became fully repayable because of noncompliance with conditions. 1. What amount should be reported as depreciation for 2022? a. 1,700,000 b. 1,600,000 c. 1,500,000 d. 1,400,000 2. What amount should be reported as depreciation for 2024? a. 1,400,000 b. 1,800,000 c. 1,600,000 d. 2,000,000Queen Company purchased a varnishing machine for P3,000,000 on January 1, 2017. The entity received a government grant of P500,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. What amount of income from the government grant is recognized in 2017?7. Karen Company purchased a varnishing machine for P3,000,000 on January 1, 2019. The entity received a government grant of P500,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. How much deferred income from the government grant will be presented in the statement of financial position for 2019?
- Cullumber Ltd. received a $275000 grant from the federal government to help buy equipment as an incentive for them to establish manufacturing operations in Ottawa. The company assumes the equipment has a 10-year useful life and uses straight-line depreciation. If Cullumber uses the cost reduction method for such transactions, it should record this transaction as a O credit to Equipment for $275000. O credit to Contribution Revenue for $275000. O credit to Deferred Revenue for $275000. O memo entry only.At the beginning of the current year, Peace Company purchased a machine for P 7,000,000 and received a government grant of P 1,000,000 toward the capital cost. The machine is to be depreciated on a straight line basis over 5 years and estimated to have a residual value of P 500,000 at the end of this period 1. The journal entry to record the government grant as a deferred revenue: 2. The journal entry to recognize income from government grant:On January 1, 2022, ABC Organization, a non-profit private organization, received the gift of a building costing to the donor P3,000,000 and the fair value at date of donation was P5,000,000. The building has an estimated remaining useful life of ten years with no salvage value. Under the agreement with the donor, the building cannot be sold by the organization for five years. How much is the depreciation expense for 2022?