Practice Questions

Topic: IAS 20 (Government Grant)

Question: 1
On 1 January 2021 ABC Limited acquired a plant at a cost of Rs. 600 million and received a grant of Rs.
400 million on the same date. The plant is to be depreciated on straight line basis over its useful life of 10
years and Rs. 120 million residual values. There is reasonable assurance that conditions of the grant shall
be complied with.
Required: Pass journal entries for the year ended is 31 December 2021, 2022, and 2023.

Question: 2
On 1 July 2022 DEF Limited acquired a plant at a cost of Rs. 10 million and received a grant of Rs. 3
million on the same date. The plant is to be depreciated on straight line basis over its useful life of 8 years
and Rs. 120 million residual values. There is reasonable assurance that the conditions of the grant shall be
complied with.
Required: Pass journal entries for the year ended is 30 June 2023, 2024, and 2025.

Question: 3
On 1 July 2021 XYZ Limited acquired a plant at a cost of Rs. 880 million and received a grant of Rs. 300
million on 30th September 2022. The plant is to be depreciated on straight line basis over its useful life of 5
years. There is reasonable assurance that the conditions of the grant shall be complied with.
Required: Pass journal entries for the year ended is 30 June 2022, 2023, and 2024.

Question: 4
On 1st January 2020, Deep Water Limited installed a non-current asset with a cost of Rs. 500,000 and
received a grant of Rs. 100,000 in relation to that asset. The asset is being depreciated by the reducing
balance method. The rate of depreciation is 12%. There is a reasonable assurance that the company will
fulfill the relevant conditions.
Required: Pass Journal entries for the year ended 31st December 2020 to 2022.

Question: 5
On 1st July 2021, Shallow Water Limited installed a non-current asset with a cost of Rs. 1,000,000 and
received a grant of Rs. 300,000 in relation to that asset. The asset is being depreciated by the reducing
balance method. The rate of depreciation is 10%. There is a reasonable assurance that the company will
fulfill the relevant conditions.
Required: Pass Journal entries for the year ended 30 June 2022 to 2024

Question: 6
At the start of the year 2021, Pure Water Limited installed a plant with a cost of Rs. 75 million and received
a grant of Rs. 20 million in relation to that asset at 1st April 2021. The asset is being depreciated by the
reducing balance method. The rate of depreciation is 12.5%. There is a reasonable assurance that the
company will fulfill the relevant conditions.
Required: Pass Journal entries for the year ended 31st December 2021 to 2023

CAPS College M. Imran Gasura