On 1 June 20x1, CLM received written confirmation from a local government agency that it would receive a $1 million grant towards the purchase price of a new office building. The grant becomes receivable on the date that CLM transfers the $10 million purchase price to the vendor. On 1 October 20x1 CLM paid $10 million in cash for its new office building, which is estimated to have a useful life of 50 years. By 1 December 20x1, the building was ready for use. CLM received the government grant on 1January 20x2. Required Discuss the possible accounting treatments of the above in the financial statements of CLM for the year ended 31 December 2x1.
On 1 June 20x1, CLM received written confirmation from a local government agency that it would receive a $1 million grant towards the purchase price of a new office building. The grant becomes receivable on the date that CLM transfers the $10 million purchase price to the vendor. On 1 October 20x1 CLM paid $10 million in cash for its new office building, which is estimated to have a useful life of 50 years. By 1 December 20x1, the building was ready for use. CLM received the government grant on 1January 20x2. Required Discuss the possible accounting treatments of the above in the financial statements of CLM for the year ended 31 December 2x1.
Chapter3: Income Sources
Section: Chapter Questions
Problem 88P
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Transcribed Image Text:On 1 June 20x1, CLM received written confirmation from a local government agency that it
would receive a $1 million grant towards the purchase price of a new office building. The
grant becomes receivable on the date that CLM transfers the $10 million purchase price to the
vendor.
On 1 October 20x1 CLM paid $10 million in cash for its new office building, which is estimated
to have a useful life of 50 years. By 1 December 20x1, the building was ready for use. CLM
received the government grant on 1January 20x2.
Required Discuss the possible accounting treatments of the above in the financial statements
of CLM for the year ended 31 December 2x1.
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