PROBLEM 6: (Government grant and Borrowing Cost) On January 1, 2022, Goldwin purchased a plating machine for P8,000,000. Goldwin received a government grant of P2,000,000 toward this capital cost. The machine had a useful life of 5 years with residual value of P500,000. Goldwin used the double declining balance method of depreciation. The accounting policy is to treat the government grant as a deferred income. What amount should Goldwin Company report as deferred grant income on December 31, 2022? Prepare the Journal Entries related to the grant. During 2022, Genesis Company constructed asset costing P4,215,000. The weighted average expenditures during the year amounted to P3,900,000. The entity borrowed P2,000,000 at 7.5% on January 1, 2022. Funds not needed for construction were temporarily invested in short-term securities and earned P59,000 in interest revenue. In addition to the construction loan, Genesis had two other notes outstanding during the year, a P1,500,000, 10-year, 10% note payable dated What amount should Genesis Company capitalize as interest for 2022?

PROBLEM 6: (Government grant and Borrowing Cost) On January 1, 2022, Goldwin purchased a plating machine for P8,000,000. Goldwin received a government grant of P2,000,000 toward this capital cost. The machine had a useful life of 5 years with residual value of P500,000. Goldwin used the double declining balance method of depreciation. The accounting policy is to treat the government grant as a deferred income. What amount should Goldwin Company report as deferred grant income on December 31, 2022? Prepare the Journal Entries related to the grant. During 2022, Genesis Company constructed asset costing P4,215,000. The weighted average expenditures during the year amounted to P3,900,000. The entity borrowed P2,000,000 at 7.5% on January 1, 2022. Funds not needed for construction were temporarily invested in short-term securities and earned P59,000 in interest revenue. In addition to the construction loan, Genesis had two other notes outstanding during the year, a P1,500,000, 10-year, 10% note payable dated What amount should Genesis Company capitalize as interest for 2022?

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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