What is the loss on repayment of the grant on January 1, 2022?What is the depreciation of the equipment for the year 2020? Situation 1 On January 1, 2020, another entity purchased equipment costing P4,800,000 with a 6-year usefullife, no residual value and used the cost model.On January 1, 2022, the entity elected to use the revaluation model. On such date, the replacement cost of theasset is P7,500,000. The entity restated its accumulated depreciation proportionately. The income tax rate is30%.Situation 2 On January 1, 2020, an entity purchased equipment at a cost of P12,000,000 that has an 8-yearuseful life. The entity used the SYD method of depreciation. On the same date, the entity received agovernment grant of P3,600,000 towards the purchase of the equipment.The entity used the deferred income approach in accounting for the grant. On January 1, 2022, the entityviolated some conditions attached to the grant and therefore returned the entire subsidy.

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What is the loss on repayment of the grant on January 1, 2022? What is the depreciation of the equipment for the year 2020?

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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