On January 1, 2011, Sagada Company received a grant of P25,000,000 from the American government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over four years, respectively, P4,000,000, P3,000,000,
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A: Surgimed Ghana Ltd. received a government grant of GH¢300,000 for acquiring plant and machinery…
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- On January 1, 2015, MERKS Company received a grant of P25,000,000 form the American government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over four year, respectively, P4,000,000, P2,000,000, P8,000,000 and P6,000,000. What amount should be recognized in 2015? * a. 25,000,000 b. 2,500,000 c. 5,000,000 d.7,500,000On January 1, 2021, Annibelle Company received a grant of P9,000,000 from the foreign government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over three years, respectively, P1,000,000, P2,000,000 and P3,000,000. What income from the government grant should be recognized in 2021?On January 1, 2014, Valiant Company received a Government grant of P60,000,000 to compensate for the cost to be incurred in planting trees over a period of 5 years. Valiant Company will incur such cost at P2,000,000 for 2014, P4,000,000 for 2015, P6,000,000 for 2016, P8,000,000 for 2017, and P10,000,000 for 2018. What amount of income from the government grant is recognized for 2015?
- Surgimed Ghana Ltd. received a government grant of GH¢300,000 for acquiring plant and machinery costing GH¢1,500,000 during 2017 financial year and having a useful life of 10 years. The grant received was credited to deferred income in the statement of financial position as a result of adopting the deferred income approach of accounting for government grant. During the 2020 financial year, the company had to refund the grant to the government due to non-compliance of the conditions laid down for the grant. Required: (i) Explain to directors of Surgimed Ghana Ltd. what should be the appropriate treatment of the refund of the grant. (ii) Explain the effect on the cost of the plant and machinery, and the amount of depreciation that should be charged during the 2020 financial year financial statements.Surgimed Ghana Ltd. received a government grant of GH¢300,000 for acquiring plant and machinery costing GH¢1,500,000 during 2017 financial year and having a useful life of 10 years. The grant received was credited to deferred income in the statement of financial position as a result of adopting the deferred income approach of accounting for government grant. During the 2020 financial year, the company had to refund the grant to the government due to non-compliance of the conditions laid down for the grant. Required Explain to directors of Surgimed Ghana Ltd. what should be the appropriate treatment of the refund of the grant. Explain the effect on the cost of the plant and machinery, and the amount of depreciation that should be charged during the 2020 financial year financial statements.On January 1, 2019, Munich Co. received a grant of P10,000,000 from the government of USA for the construction of a building that will be used as a laboratory and research facility with an estimated cost of P15,000,000 and useful life of 10 years. The facility was completed on January 1, 2020. How much is the balance of deferred income from government grant on December 31, 2020 under the gross method (deferred income approach)?
- On July 1, 2004, the national government granted a parcel of land located in Baliuag, Bulacan to Black. On the date of grant, the land had a fair value of P2,000,000. The grant required Black to construct a cold storage building on the site. Black finished the construction of the building, which costs P4,000,000 and has an estimated useful life of 25 years, on January 2, 2005. How much income from the government grant should be recognized in 2005? a. P2,000,000 b. P160,000 c. P80,000 d. P0On January 1, 2021, ALI Inc. received P2,000,000 from national government on the condition that the company will construct an environmentally-friendly building with a cost of P13,000,000 and useful life of 10 years and residual value of P1,000,000. On January 1, 2023, the government grant became repayable as a result of ALI Inc.’s failure to comply with the environmentally-friendly specification requirement of the government grant condition. __________1. Loss on repayment of government grant on January 1, 2023 if the company accounts for the government grant as deferred income__________2. Depreciation expense for the year ended December 31, 2023, if the company accounts for the government as deduction from the cost of the assetIn January, 2022, Harmony Inc. has the following expenditures related to manufacturing a new generation of its product. Match each expenditure to the appropriate accounting treatment on the right. Takes possession of a manufacturing machine. The vendor sends an invoice for $650,000. Pays a machine import duty of $35,000 to the government. Pays employees $75,000 for research and development to finalize the new product design. Receives an invoice for $4,250 from the company that shipped the machine. Pays employees $16,500 to install, customize, and test the new manufacturing machine. Pays…
- I Company received a government grant of P15,000,000 to install and run a windmill in an economically backward area. The entity has estimated that such a windmill would cost P25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the local market from the economically backward area where the windmill is located, instead of employing workers from other parts of the country. The entity shall maintain a ratio of 1:1 local worker to workers from outside in its labor force for the next 5 years. The construction was completed at the beginning of current year. The windmill is to be depreciated using the straight line method over a period of 10 years. What amount of income from the government grant is recognized for the current year?On January 2, 2011, Brand Company received a grant P60,000,000 to compensate if for cost it incurred in planting trees over a period of five years. Brand Company will incur such cost in manner: Years 2011 2012 2023 2014 2015 Cost 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 Actual cost incurred in planting trees showed P2,000,000 and P4,000,000 in years 2011 and 2012, respectively. However, in 2013 up to year 2014, the company has stopped planting trees. Due to non-fulfillment of its obligation , the government is demanding an immediate repayment of the grant in th amount of P50,000,000 which is considered reasonable. 1. What amount should be recognized as an expense related to the repayment of grant? 2. What amount of income should Brandy Company recognize at the end year of 2014?On January 1, 2020, Optimistic Company was granted by a local government authority 5,000 hectares of land located near the slums outside the city limits. The condition attached to this grant was that the entity shall clean up this land and lay roads by employing laborers from the village where the land is located. The government has fixed the minimum wage payable to the workers. The entire operation will take 3 years and is estimated to cost P10,000,000. This amount will be spent P2,000,000 for 2020, P2,000,000 for 2021 and P6,000,000 for 2022. The fair value of this land is P12,000,000. Prepare the journal entry for 2020 in connection with this grant