MMSU – CBEA ACC 100 – BS Acc 1 Exercise

Name: ______________________________ Section: _____ Date: _________Score: _____

Solve for what is being required. Provide solution in good form. Write your final answer
on the space provided for each question.

1. On January 1, 2023, White Company received a government grant of P50,000,000 to

compensate for costs to be incurred in planting trees over a period of 5 years. The
entity will incur such costs at P3,000,000 for 2023, P5,000,000 for 2024, P7,000,000
for 2025, P10,000,000 for 2026, and P15,000,000 for 2027. What is the balance of
deferred grant income as of December 31, 2024? ____________________

2. Blue Company purchased a jewel polishing machine for P360,000 on January 1, 2023
and received a government grant of P50,000 towards the capital cost. Company policy
is to treat the grant as a deferred income. The machine was to be depreciated on a
straight-line basis over 8 years and was estimated to have a residual value of P5,000
at the end of the period.

a) Under PAS 20 government grants, what should be the deferred grant income
as of December 31, 2024? ____________________

b) Under PAS 20 government grants, what should be the depreciation expense

in respect of the machine for the year ended December 31, 2022?
____________________

3. Orange Company purchased a jewel polishing machine for P360,000 on January 1,

2023 and received a government grant of P50,000 towards the capital cost. Company
policy is to treat the grant as a reduction in the cost of the asset. The machine was to
be depreciated on a straight-line basis over 8 years and was estimated to have a
residual value of P5,000 at the end of the period.

a) Under PAS 20 government grants, what should be the depreciation expense

in respect of the machine for the year ended December 31, 2023?
____________________

b) Under PAS 20 government grants, what is the carrying amount or net book
value of the machine as of December 31, 2023? ____________________

4. On January 1, 2023, Red Company received a grant of P1,500,000 from the

government to subsidize tuition fees for a period of 5 years. On January 1, 2025, the
entity violated certain conditions attached to the grant, and therefore had to repay fully
such grant to the government. What amount should be recognized as loss
resulting from the repayment of the grant in 2025? ____________________

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