1. avatar says

    If a grant is received for the construction of an asset and after a year of use the asset is no longer being used and is held for sale. The grant was being amortized over the useful life of the asset. The asset is no longer being depreciated. What would be the best possible way to treat the grant????

    • Avatar of MikeLittle says

      I suppose that the answer to that would really depend on the terms under which the grant was given. But, in the real World, I imagine that the grantor would have insisted on including the term that “if the granted asset is sold or classified as held for sale, the remaining part (or even the whole) of the grant so far not amortised should be repaid to the grantor”

      But it really must come down to the specifics of the terms which lie behind the awarding of the grant

    • Avatar of MikeLittle says

      For what? It’s enough for you to be able to deal with a sub-question concerning government grants but it’s not enough for you to use as a guide for ethics in a corrupt world.

      Does that help? Or would you like to be more specific with your question?

      • Avatar of MikeLittle says

        No! Absolutely not. There are 100 marks in the paper and I can almost guarantee that they will not all 100 be based on government grants. I’m expecting questions on consolidations, preparation of financial statements and either a cash flow question, an interpretation question or a combination of the two. And that’s just 75%.

        I don’t even believe that the remaining 25% will be entirely government grant based. In fact, I’d be surprised if it were more than 10 marks maximum.

        So, in answer to your much more specific question “is this lecture enough for me to pass tha paper ???” the answer I’m sorry to have to give you is an EMPHATIC NO!!!!

        Now, let me answer the question you didn’t ask (and how many times have I warned students NOT to do that?)

        “Is the lecture on government grants sufficient for me to make a reasonable attempt at a part question which could potentially be in the exam for a maximum of 10 marks?”

        IF that were the question you had intended to ask, then the answer would be “Probably, yes” And if you ever were to want to know more about the accounting treatment of government grants, you could always research it in a study text or even on line. But what’s in the notes SHOULD be sufficient

      • Avatar of absylum007 says

        Is the lecture on government grants sufficient for me to make a reasonable attempt at a part question which could potentially be in the exam for a maximum of 10 marks?”

        this was my question ….
        i should learn to phrase my questions more specifically

  2. Avatar of marilynlojikim says

    Opentuition is more than a jackpot, as it doesnt cost you anything! If any of you need more than whats been offered, maybe you can look and moan in another site. Pls respect other students and the tutor esp. Thanks ( sorry admin… Just get annoyed with someone) cheers ;)

    • Avatar of MikeLittle says

      Credit Cash, debit Deferred Credit

      If the amount to be paid back exceeds the amount in the deferred credit account, we’ll need to debit either the expense account which was credited with the grant or the TNCA account.

      If it’s a TNCA grant, then we need to recalculate depreciation to date because we will have been charging depreciation on a reduced figure

  3. avatar says

    Could anyone help me, it is confusing for me. what is the treatment if GG is income related or asset related? Generally what is the main difference between the income and asset related GGs?

    Thank you so much

    • Avatar of MikeLittle says

      It surely doesn’t need any deeper explanation! I gave this lecture (as a scientific experiment) to the troop of chimpanzees at Frankfurt zoo. Admittedly, they are an extremely bright group of chimpanzees. However 18 out of the 23 indicated that they had fully understood and wanted to move on to something more difficult like “What is the journal entry to record the purchase of a banana on credit?”

      My comment below is still relevant – this lecture was recorded because there had been feedback comment that not all chapters had recorded lectures to support them so Admin persuaded me to record this and one or two others. Against my better judgement, I complied.

      But, as always, if you don’t lke it, don’t listen


      • Avatar of MikeLittle says

        @Miss A.., For Heaven’s Sake!! There’s nothing to the subject – it’s a straight-forward choice of two methods! I wasn’t going to even record it because it’s so bl**dy simple but I was persuaded to because not all the chapters were covered by lectures.

        READ IT FOR YOURSELVES – THERE REALLY IS NO MORE BASIC SUBJECT. Here, pass me a tissue and I’ll wipe your nose for you too!

      • Avatar of Miss A.. says

        @MikeLittle, hmmm…….but my rose is not running Mr.Mike.

        soory…but i found response rude.It was kinda of suggestion from all students & i agreed to that.I know a 25 mark question cannot appear from this area, but a small part of question can carrying 2 to 5 marks can appear.In exam even I mark matters if one gets 49.It oks if not all chapters are covered by lectures.I still appreciate your efforts :)

      • Avatar of MikeLittle says

        @Miss A.., Ok, here’s a response to Sharlene’s original post. Now concentrate REALLY hard because it’s a very tricky area!

        “I thought I would have seen and excercise ( sic ) on how to record the gov’t grant”

        Here we go!

        Debit cash, Credit either TNCA or Deferred Income ( if it’s an asset related grant or…
        the related expense account

        Is that one whole lot better?

  4. avatar says

    I agree to the earlier comments. This lecture is useless because I can read the text myself :). More valuable would be to have explanation of this text with some practical example on how to record these transactions in Financial statements

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