On January 1, 2021, Citimart Company was granted by a local government authority 5,000 hectares of land located near the slums outside the city limits. The condition attached to this grant was that the entity shall clean up this land and lay roads by employing laborers from the village where the land is located. The government has fixed the minimum wage payable to the workers. The entire operation will take 3 years and is estimated to cost P10,000,000. This amount will be spent P2,000,000 for 2021, P2,000,000 for 2022, and P6,000,000 for 2023. The fair value of this land is P12,000,000. Required: Prepare journal entries for the current year in connection with the grant.
On January 1, 2021, Citimart Company was granted by a local government authority 5,000 hectares of land located near the slums outside the city limits. The condition attached to this grant was that the entity shall clean up this land and lay roads by employing laborers from the village where the land is located. The government has fixed the minimum wage payable to the workers. The entire operation will take 3 years and is estimated to cost P10,000,000. This amount will be spent P2,000,000 for 2021, P2,000,000 for 2022, and P6,000,000 for 2023. The fair value of this land is P12,000,000. Required: Prepare journal entries for the current year in connection with the grant.
Chapter3: Income Sources
Section: Chapter Questions
Problem 88P
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![Problem 24-2 (IFRS)
On January 1, 2021, Citimart Company was granted by a local
government authority 5,000 hectares of land located near
the slums outside the city limits.
The condition attached to this grant was that the entity shall
clean up this land and lay roads by employing laborers from
the village where the land is located.
The government has fixed the minimum wage payable to the
workers.
The entire operation will take 3 years and is estimated to
cost P10,000,000.
This amount will be spent P2,000,000 for 2021, P2,000,000
for 2022, and P6,000,000 for 2023.
The fair value of this land is P12,000,000.
Required:
Prepare journal entries for the current year in connection with
the grant.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4cbfffa0-a68d-40ec-a03b-c1e8a2ec996f%2Fe9339819-9430-4ff6-b9bc-54fea92e9a70%2F41r4ta_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 24-2 (IFRS)
On January 1, 2021, Citimart Company was granted by a local
government authority 5,000 hectares of land located near
the slums outside the city limits.
The condition attached to this grant was that the entity shall
clean up this land and lay roads by employing laborers from
the village where the land is located.
The government has fixed the minimum wage payable to the
workers.
The entire operation will take 3 years and is estimated to
cost P10,000,000.
This amount will be spent P2,000,000 for 2021, P2,000,000
for 2022, and P6,000,000 for 2023.
The fair value of this land is P12,000,000.
Required:
Prepare journal entries for the current year in connection with
the grant.
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