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 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?
Chapter3: Income Sources
Section: Chapter Questions
Problem 88P
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Question
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?
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