Example 2Kaokodi Ltd received a grant of GHC60 million to compensate it for costs it incurred in plantingtrees over a period of five years. Kaokodi Ltd will incur such costs in this manner:YearCostsGHC'00012,00024,0006,00048,00010,000Total costs thus incurred will aggregate to GHC30 million, whereas the grant received is GHC60million.Reguired:Based on the provisions of IAS 20, how would Kaokodi Ltd treat the "grant" in its books?Example 3Nyansapo Ltd received a grant of GHC150 million to install and run a solar energy system in aneconomically backward area. Nyansapo Ltd has estimated that such a system would cost GHC250million to construct. The secondary condition attached to the grant is that the entity should hirelabour in the local market (i.e., from the economically backward area where the windmill is located)instead of emploving workers from other parts of the country. It should maintain a ratio of 1:1 localworker to workers from outside in its labor force for the next 5 years. The windmill is to bedepreciated using the straight-line method over a period of 10 years.Required:Advise Nyansapo Ltd on the treatment of this grant in accordance with IAS 20.

NOTE : As per BARTLEBY guidelines, when multiple questions are given then first question is to be…

Example 2 Kaokodi Ltd received a grant of GHC60 million to compensate it for costs it incurred in plantin trees over a period of five years. Kaokodi Ltd will incur such costs in this manner: Year Costs GHC'000 2,000 2 4,000 3. 6,000 4. 8,000 10,000 Total costs thus incurred will aggregate to GHC30 million, whereas the grant received is GHC60 millhon. Reguired: Based on the provisions of IAS 20, how would Kaokodi Ltd treat the "grant" in its books? 5.

Example 2 Kaokodi Ltd received a grant of GHC60 million to compensate it for costs it incurred in plantin trees over a period of five years. Kaokodi Ltd will incur such costs in this manner: Year Costs GHC'000 2,000 2 4,000 3. 6,000 4. 8,000 10,000 Total costs thus incurred will aggregate to GHC30 million, whereas the grant received is GHC60 millhon. Reguired: Based on the provisions of IAS 20, how would Kaokodi Ltd treat the "grant" in its books? 5.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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