Power Limited, a manufacturer and supplier of special bulbs/ globes, was awarded a government grant of R500 000 on the 2nd of January 2021, to purchase a specialised machine costing R1 500 000. This machine would enable the company to manufacture globes which will automatically come on when load shedding kicks in. The machine was purchased on the 1 March 2021 and had a useful life of 5 years with a residual value of R50 000. The company uses the straight-line method for depreciation. The grant was received because of compliance with certain conditions in the prior year. All conditions attached to the grant, except for the acquisition of the plant, had all been met on date of receipt. 1 What two criteria must be met before a government grant can be recognised? 2 Provide the general journal entries for the years ended 31 December 2021 and 31 December 2022. The company has the policy of recognising government grants as grant income.
Power Limited, a manufacturer and supplier of special bulbs/ globes, was awarded a government grant of R500 000 on the 2nd of January 2021, to purchase a specialised machine costing R1 500 000. This machine would enable the company to manufacture globes which will automatically come on when load shedding kicks in. The machine was purchased on the 1 March 2021 and had a useful life of 5 years with a residual value of R50 000. The company uses the straight-line method for
1 What two criteria must be met before a government grant can be recognised?
2 Provide the general
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