Magna Corporation is provided a grant by a foreigner government for the purpose of acquiring land for a building site. The grant is a zero-interest loan for 5 years evidenced by a promissory note. The loan was granted on January 1, 2020 for 8,000,000. The market rate of interest is 6%. The present value of 1 for 5 periods at 6% is 0.7473. Assume that interest expense and grant income are not offset against each other, Determine the amount of interest reported in 2022 ,amount of grant income realized in 2023 and amount of deferred grant income as of December 31, 2024.

Magna Corporation is provided a grant by a foreigner government for the purpose of acquiring land for a building site. The grant is a zero-interest loan for 5 years evidenced by a promissory note. The loan was granted on January 1, 2020 for 8,000,000. The market rate of interest is 6%. The present value of 1 for 5 periods at 6% is 0.7473. Assume that interest expense and grant income are not offset against each other, Determine the amount of interest reported in 2022 ,amount of grant income realized in 2023 and amount of deferred grant income as of December 31, 2024.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 10RE

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