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. 2,000,000
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. 2,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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. 2,000,000
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