arhata 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 approach
arhata 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 approach
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Tarhata 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
- Deferred income approach
- Deduction from asset approach
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