Question
In: Finance
A company receives a government grant of $600,000 on 1 April 2007 to facilitate purchase on...
A company receives a government grant of $600,000 on 1 April 2007 to facilitate purchase on the same day of an asset which costs $900,000. The asset has a five year useful life and is depreciated on a 40% reducing balance basis. Company policy is to account for all grants received as deferred income. Required: 1. What amount of income will be recognized in respect of the grant in the year to 31 March 2010? 2. Refer to original data. What amount of income will be recognized in respect of the grant in the year to 31 March 2010 if the company accounted for the grant on a straight-line basis with a useful life of 4 years instead of a 40% reducing balance basis? 3. Refer to original data. What amount of depreciation will be recognized in respect of the asset in the year to 31 March 2010 if the company accounted for the grant by deducting the grant in arriving at the carrying amount of the asset instead of accounting for the grants received as deferred income?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
On 1 April 2016, Gidimadjor Ltd received a government grant of GH¢8 million towards the purchase...
On 1 April 2016, Gidimadjor Ltd received a government grant of
GH¢8 million towards the purchase of new plant with a gross cost of
GH¢64 million. The plant has an estimated life of 10 years and is
depreciated on a straight-line basis.
One of the terms of
the grant is that the sale of the plant before 31 March 2020 would
trigger a repayment on a sliding scale as follows:
Sale
in the year ended:
Amount of repayment...
On 1 January 20X6, Juwita Bhd. received a government grant of RM5,000,000 for the purchase of...
On 1 January 20X6, Juwita Bhd. received a government grant of
RM5,000,000 for the purchase of a machinery costing RM8,000,000.
The useful life of the machinery was 5 years. The company adopts
the deferred income method for the treatment of the government
grant. On 1 January 20X8, the company fails to comply with the
conditions attached to the grant by the government.
Required: State the accounting treatment for the government for
the year ended 30 June 2018, in accordance with...
Purchase Receipt 1 Purchase Receipt 1 - Equipment Purchase Date: 7/1/Year 2 Purchase Amount: $600,000 Purchase...
Purchase Receipt 1
Purchase Receipt 1 - Equipment
Purchase Date: 7/1/Year 2
Purchase Amount: $600,000
Purchase Receipt 2
Purchase Receipt 2 - Machine Set
Purchase Date: 1/1/Year 5
Purchase Amount: $600,000
Purchase Receipt 3
Purchase Receipt 3 - Land
Purchase Date: 1/1/Year 3
Purchase Amount: $650,000
Scroll down to complete all parts of this task.
At December 31, Year 5, Aaron Co. had the following property,
plant, and equipment:
Asset
Fair Value
Cost to Sell
Present Value of All Cash...
(TCO B) Adjusting entries: On April 1, 201X, Jokers Company assigns $600,000 of its accounts receivable...
(TCO B) Adjusting entries: On April 1, 201X, Jokers Company
assigns $600,000 of its accounts receivable to the First National
Bank as collateral for a $300,000 loan due July 1, 201X. The
assignment agreement calls for Jokers Company to continue to
collect the receivables. First National Bank assesses a finance
charge of 2% of the accounts receivable, and interest on the loan
is 10% (a realistic rate of interest for a note of this type).
Prepare the journal entry for...
On April 1, 2011, Company A purchased equipment for $100,000. On the purchase, a sales tax...
On April 1, 2011, Company A purchased equipment for $100,000. On
the purchase, a sales tax of 15% is being paid. The equipment has
defected, so a maintenance cost of $2000 is incurred for repairs.
After the equipment arrives, the company must pay the
transportation cost of $5000. The company also paid installation
and testing costs of $20000. This equipment is estimated to have
5-year useful life. At the end of the 5th year, the salvage value
(residual value) will...
On April 1, 2011, Company A purchased equipment for $100,000. On the purchase, a sales tax...
On April 1, 2011, Company A purchased equipment for $100,000. On
the purchase, a sales tax of 15% is being paid. The equipment has
defected, so a maintenance cost of $2000 is incurred for repairs.
After the equipment arrives, the company must pay the
transportation cost of $5000. The company also paid installation
and testing costs of $20000. This equipment is estimated to have
5-year useful life. At the end of the 5th year, the salvage value
(residual value) will...
On 1 April 2007, Fino increased the operating capacity of its plant. Due to a lack...
On 1 April 2007, Fino increased the operating capacity of its
plant. Due to a lack of liquid funds it was unable to buy the
required plant which had a cost of $350,000. On the recommendation
of the finance director, Fino entered into an agreement to lease
the plant from the manufacturer. The lease required four annual
payments in advance of $100,000 each commencing on 1 April 2007.
The plant would have a useful life of four years and would...
Equipment was purchase on April 1, 2013 with no salvage value for $308,000. It is being...
Equipment was purchase on April 1, 2013 with no salvage value
for $308,000. It is being depreciated over 7 years. Prepare a
straight-line depreciation shcedule and a double-declining
depreciation schedule.
An employee who will be 40 years old on April 1 receives group-term life insurance coverage...
An employee who will be 40 years old on April 1 receives
group-term life insurance coverage of $75,000. How much taxable
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a.$2.50 b.$2.75 c.$12.75 d.$4.25
On 1 April 2020, the Government issued seven-year Government fixed-interest bonds with a face value of...
On 1 April 2020, the Government issued seven-year Government
fixed-interest bonds with a face value of $25 million, paying
half-yearly coupons at 6.50 per cent per annum. Coupons are payable
on 31 March and 30 September each year until maturity.
On 15 September 2022, the holder of the bonds sells at a current
yield of 6.75 per cent per annum. You are required to
calculate:
n (number of periods)
i (current yield)
C (coupon payment)
k (fraction of elapsed interest...
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