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ompany purchased the building for Pl no residual value. y 1, 2021, the entire amount of the go pliance with conditions attached to the

ompany purchased the building for Pl no residual value. y 1, 2021, the entire amount of the go pliance with conditions attached to the

FINANCIAL ACCOUNTING
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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Tarhata Company received government grant of P2,000,000 related to a factory building that is purchased in January 2019. Tarhata Company acquired the building from an industrialist identified by the government. If Tarhata Company did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. Tarhata Company purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2021, the entire amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: Prepare all journal entries assuming the government grant is accounted for using: 1. Deferred income approach 2. Deduction from asset approach
Transcribed Image Text:Tarhata Company received government grant of P2,000,000 related to a factory building that is purchased in January 2019. Tarhata Company acquired the building from an industrialist identified by the government. If Tarhata Company did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. Tarhata Company purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2021, the entire amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: Prepare all journal entries assuming the government grant is accounted for using: 1. Deferred income approach 2. Deduction from asset approach
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