arhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for 12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant. Required: Prepare journal entries assuming the government grant is accounted for using: Deferred income approach Deduction from asset approach
arhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for 12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant. Required: Prepare journal entries assuming the government grant is accounted for using: Deferred income approach Deduction from asset approach
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 30P
Related questions
Question
Tarhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 from an industrialist identified by the government.
If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency.
The entity purchased the building for 12,000,000. The useful life of the building is 5 years with no residual value.
On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant.
Required:
Prepare
- Deferred income approach
- Deduction from asset approach
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College