ABC Inc. was granted a parcel of land by a local government authority. The condition attached to this grant was that ABC Inc. should clean up this land and lay roads by employing laborers from the village in which the land is located. The entire operation will take three years and is estimated to cost ₱100 million. This amount will be spent in this way: ₱20 million each in the first and second years and ₱60 million in the third year. The fair value of this land is currently ₱120 million. How much should be recognized as income from government grant at the end of the first year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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ABC Inc. was granted a parcel of land by a local government authority. The condition attached to this grant was that ABC Inc. should clean up this land and lay roads by employing laborers from the village in which the land is located. The entire operation will take three years and is estimated to cost ₱100 million. This amount will be spent in this way: ₱20 million each in the first and second years and ₱60 million in the third year. The fair value of this land is currently ₱120 million. How much should be recognized as income from government grant at the end of the first year?

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