chine. The grant was approved on 1 February 2017 and the government released the fund on 1 April 2017. Pineapple purchased the machine for $5,000,000 with cash on 1 June 2017 and the machine was used for production The machine was depreciated over its estimated useful life of 10 years on method and depreciation was calculated monthly. Pineapple Ltd prepared statements at 31 December each year. (a) On which date should Pineapple Ltd recognize the government grant? Explain. (b) Assume Pineapple Ltd recognized the government grant as deferred income. Prepare the extracts of statement of financial position and the statement of profit or loss for the year ended 31 December 2017. Show your workings. (c) The life of a business is divided into specific time periods, usually a year, to measure results of operations for each such time period and to portray financial conditions at the
Pineapple Ltd applied for a government grant of $1,000,000 on 5 January 2017 to cover part of the cost of a new machine. The grant was approved on 1 February 2017 and the government released the fund on 1 April 2017. Pineapple purchased the machine for
$5,000,000 with cash on 1 June 2017 and the machine was used for production The machine was
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(a) On which date should Pineapple Ltd recognize the government grant? Explain.
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(b) Assume Pineapple Ltd recognized the government grant as deferred income. Prepare the extracts of
statement of financial position and the statement of profit or loss for the year ended 31 December 2017. Show your workings. -
(c) The life of a business is divided into specific time periods, usually a year, to measure results of operations for each such time period and to portray financial conditions at the end of each period.
How does the above relate to the accrual basis of accounting? What influence has it had on accounting entries and practices?
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