Lany Co. received a government grant of P2,000,000 related to a factory building that it purchased in January 2022. The entity acquired the building 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 P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2025, 50% of the amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: 1. Compute the government grant income recognized in 2022. 2. Assuming the deferred income approach is used, compute the loss recognized due to the repayment of the government grant.

Lany Co. received a government grant of P2,000,000 related to a factory building that it purchased in January 2022. The entity acquired the building 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 P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2025, 50% of the amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: 1. Compute the government grant income recognized in 2022. 2. Assuming the deferred income approach is used, compute the loss recognized due to the repayment of the government grant.

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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