Answered: ow much should be grant income for the…

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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Topic: Government Grant

Question:

How much should be grant income for the first year of grant for
each of the following cases?

a. A 10-year, non-interest bearing, P20,000,000 term loan was received from the Philippine government. Without the loan from the government, the entity would need to pay 8% interest per year.

b. P3,000,000 government grant was received to support the
continued existence of the entity. The entity was heavily
affected by the ashfall from a nearby volcano. The entity
has a total legal life of 50 years and is on its 40th year.

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