Scribd Logo
Upload

Welcome to Scribd!

  • 43 views

    Government Grant Sample Problems

    Uploaded by

    j.cabuntagon.140822.tc
    Sample problems

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Government Grant Sample Problems

    Uploaded by

    j.cabuntagon.140822.tc
    43 views2 pages
    Sample problems

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Sample problems

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    43 views2 pages

    Government Grant Sample Problems

    Uploaded by

    j.cabuntagon.140822.tc
    Sample problems

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    Subject: Intermediate Accounting 2

    Topic: Government Grant Sample Problems

    Problem 1
    At the beginning of current year, Sagada Company received a grant of P25, 000, 000 from
    the American government in order to defray safety and environmental costs withing the
    area where the entity is located.

    The safety and environmental costs are expected to be incurred over four years,
    respectively, P2, 000, 000, P4, 000, 000, P6, 000, 000, and P8, 000, 000.

    What amount of grant income should be recognized for the current year?

    a. 25, 000, 000


    b. 2, 000, 000
    c. 2, 500, 000
    d. 6, 250, 000

    Problem 2
    At the beginning of current year, Sabangan Company received a grant of P6, 000, 000 from
    the British government to compensate for massive losses incurred because of a recent
    tsunami.

    The grant was made for the purpose of giving immediate financial support to the entity. It
    will take the entity two years to reconstruct the assets destroyed by the tsunami.

    What amount of grant income should be recognized in the current year?

    a. 6, 000, 000
    b. 3, 000, 000
    c. 1, 500, 000
    d. 0

    Problem 3
    Peach Company purchased a machine for P7, 000, 000 on January 1, 2018, and received a
    government grant of P1, 000, 000 toward the capital cost.

    The machine is to be depreciated on a straight-line basis over 5 years and estimated to have
    a residual value of P500, 000 at the end of this period.

    The accounting policy is to treat the grant as a deferred income.

    1. What is the carrying amount of the asset on December 31, 2029?

    a. 4, 200, 000
    b. 5, 700, 000
    c. 4, 400, 000
    d. 3, 900, 000
    2. What is the deferred grant income on December 31, 2019?

    a. 400, 000
    b. 800, 000
    c. 600, 000
    d. 0

    You might also like