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Sol. Man. Chapter 18 Govt Grants Ia Part 1B
Sol. Man. Chapter 18 Govt Grants Ia Part 1B
Government Grants
5. Answer: 0
6. Solution:
(6M – 1M) x 29.25/30 + 1M = 5,875,000
7. Solution:
(2M / 30 yrs.) x 9/12 = 50,000
8. Solution:
(6M – 1M) ÷ 30 x 9/12 = 125,000
9. Solution:
(2M x 29.25/30 = 1,950,000
10. Solution:
(6M – 2M – 1M) x 29.25/30 + 1M = 3,925,000
11. Solution:
(6M – 2M – 1M) ÷ 30 x 9/12 = 75,000
12. Solution:
(1.8M x 4 mos. / 6 mos.*) = 1,200,000
1
*The income can be recognized on a straight-line basis because the related
costs were incurred evenly.
13. Solution:
(1.8M x 2/6) = 600,000
14. Solution:
(2.7M x 4/6) – (1.8M x 4/6) = 600,000
PROBLEM 3: EXERCISE
Solutions:
Requirement (a):
GROSS PRESENTATION
LIABILITIES
Deferred income from
government grant 7,200,000 7,600,000 8,000,000
2
NET PRESENTATION
Requirement (b):
Gross presentation
Jan. Cash on hand 8,000,000
1, Deferred income –
20x government grant 8,000,000
1
Dec. Building 20,000,00
31, Cash in bank (and/or other 0 20,000,00
20x appropriate accounts) 0
1
Dec. Depreciation expense 1,000,000
31, (20M ÷ 20 years)
20x Accumulated depreciation 1,000,000
2
Deferred income 400,000
(8M ÷ 20 years)
Income from government
Grant 400,000
Dec. Depreciation expense 1,000,000
31, (20M ÷ 20 years)
20x Accumulated depreciation 1,000,000
3
Deferred income 400,000
(8M ÷ 20 years)
Income from government
Grant 400,000
3
Net presentation
Jan. Cash on hand 8,000,000
1, Deferred income –government
20x grant 8,000,000
1
Dec. Building 20,000,00
31, Cash (and other appropriate 0 20,000,00
20x accounts) 0
1
Deferred income –
government grant
Building 8,000,000
8,000,000
Dec. Depreciation expense 600,000
31, (12M ÷ 20 years)
20x Accumulated depreciation 600,000
2
Dec. Depreciation expense 600,000
31, (12M ÷ 20 years)
20x Accumulated depreciation 600,000
2
4
PROBLEM 4: CLASSROOM ACTIVITY
Solutions:
Requirement 1:
a. Income from the grant of ₱1M will be recognized in profit or loss as
depreciation is recognized on the equipment.
b. Income from the grant of land will be recognized in profit or loss as
depreciation is recognized on the constructed building.
c. Income from the ₱600,000 grant will be recognized in profit or loss as
expenditures are made on the clean-up drive.
d. Income from the ₱200,000 grant is recognized immediately.
Requirement 2:
Cash 1,000,000
Deferred income from government grant 1,000,000
Land 800,000
Deferred income from government grant 800,000
Cash 600,000
Deferred income from government grant 600,000
Cash 200,000
Income from government grant 200,000
Requirement 3:
Equipment 1,200,000
Cash 1,200,000
SYD = {5 x [(5+1)/2]} = 15
(1,200,000 x 90%) x 5/15 x 10/12 = 300,000
Building 2,000,000
Cash 2,000,000
LIABILITIES
Deferred income from government grant 1,522,222
20x1
Statement of profit or loss
Income from government grant 1,077,778
Clean-up drive expense (720,000)
Depreciation expense (300,000)
Profit (Loss) 57,778