On January 1, 20x1, ABC Co. received 2,000,000 grant from the government to aid in the construction of a new building. The construction of the building was finished on March 31, 20x2 for a total cost of 6,000,000. The building is estimated to have a useful life of 30 years and a residual value of 1,000,000. If ABC Co. uses the gross presentation, how much is the income from the government grant in 20x1? If ABC Co. uses the gross presentation, how much is the carrying amount of the building on December 31, 20x2? If ABC Co. uses the gross presentation, how much is the income from the government grant in 20x2? If ABC Co. uses the gross presentation, how much is the depreciation expense in 20x2? If ABC Co. uses the gross presentation, how much is the balanced of the deferred income from government grant on December 31, 20x2? If ABC Co. uses the net presentation, how much is the carrying amount of the building on December 31, 20x2? If ABC Co. uses the net presentation, how much is the depreciation expense in 20x1?

SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter17: Business Tax Credits And The Alternative Minimum Tax
Section: Chapter Questions
Problem 11P
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On January 1, 20x1, ABC Co. received 2,000,000 grant from the government to aid in the construction of a new building. The construction of the building was finished on March 31, 20x2 for a total cost of 6,000,000. The building is estimated to have a useful life of 30 years and a residual value of 1,000,000.

  1. If ABC Co. uses the gross presentation, how much is the income from the government grant in 20x1?
  2. If ABC Co. uses the gross presentation, how much is the carrying amount of the building on December 31, 20x2?
  3. If ABC Co. uses the gross presentation, how much is the income from the government grant in 20x2?
  4. If ABC Co. uses the gross presentation, how much is the depreciation expense in 20x2?
  5. If ABC Co. uses the gross presentation, how much is the balanced of the deferred income from government grant on December 31, 20x2?
  6. If ABC Co. uses the net presentation, how much is the carrying amount of the building on December 31, 20x2?
  7. If ABC Co. uses the net presentation, how much is the depreciation expense in 20x1?
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