Question

ordan Competencies Co. Ltd works in HR development. On 1/1/2018, the company was granted JD16’200 for IT equipment costing JD48’000 bought in cash, and will be used in training project over 4 years. The grant is guaranteed by the Government, and it will be paid in full by the end of the 2nd year of the project. The company is fully complied with the grant’s conditions all over the project. Required: under “deducting grant from carrying value of asset” approach, 1). Present the related information in Jordan Competencies Co. Ltd balance sheet as on 31/12/2018 and 31/12/2019. 2). Journalize acquisition of the IT equipment, and depreciation for the first year

Answer 1

1….
Jordan Competencies Co. Ltd
Balance sheet presentation(Partial)
Non-current assets	31/12/2019	31/12/2018
Equipment, gross	31800	31800
Less: Acc. Depn.-Eqpt.	15900	7950
Equipment,net	15900	23850
Grant receivable	0	16200

2… J/E s	Jordan Competencies Co. Ltd
Date	Account Title	Debit	Credit
1/1/2018	Equipment	48000
	Cash		48000
	Grant receivable	16200
	Equipment		16200
	(Reduction in carrying amount of the asset)
31/12/2018	Depreciation expense	7950
	Accumulated depreciation-Equipment		7950
	St. line depn. Of the balance amt.(48000-16200)/4
	So, carrying value of the equipment at end 2018 is
	48000-16200-7950=
	23850
31/12/2018	Depreciation expense	7950
	Accumulated depreciation-Equipment		7950
	(48000-16200)/4
	Cash	16200
	Grant receivable		16200
	(to record receipt of grant)
	Carrying value of the equipment at end 2019 is
	23850-7950=
	15900