Government grants – ACCA Financial Reporting (FR)
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at 08:08 it is stated that “deferred income” is a current liability. I am slightly confused as only $200k is being reconised as grant income annually (subject to conditions being met). I would have thought that come the end of the year when we have Dr: Deferred Income – $200k; Cr: Grant Income – $200k then the outstanding balance of $1.8m for deferred income – $200k would be classified as current liabilities and $1.6m classified as LT Liabilities in the SFP. BTW the journal entries really help understand the double entry system of each transaction (A = O + L).
Is deferred income the same as prepaid income
Hi,
What if the NCA has a residual value. How should we release the GRANT??
Many thanks
Thank you so much. can you direct me to where i can get questions and exercises to practice for the exams…
Hello Tuitor ..i so appreciate the clarifications made however what happens if the NCA to which the grant relates is revalued.
Hello Sir,
Is it permissible to write off the grant against the cost of the NCA and depreciate the reduced cost.? i.e annual dep’n is ($10m- $2m)/10yrs= $800k.
Thank you.
Why are we taking $1,600 to SFP in year 1 instead of $1,800?
We have split that 1800 into current and non current liability.
So the 200 will be payable in the next 12 months, and we have classified as current liability and the rest of the amount i,e 1600 classified as Non current liability(payable after 12 months)
Hi. I have one doubt. Are we not suppose to show Bank account 2 million in the SFP?
Yes we certainly would. The entry would be Dr. Bank 2 million to Cr. Deferred income 2million.
So, accordingly you’ll show an increase in the bank balance in your SFP.
Hi, technically speaking, income is a CR to the SPL, so I would use a negative figure, and a positive figure for the expense (as expense is a DR balance). Would I lose marks for this? thanks
Hi,
You don’t need to prepare extracts from the financial statements in the exam, so this wouldn’t be an issue. What you would need to do in the exam is make sure that you add/subtract the figures correctly to the amounts already held in the trial balance.
Thanks
Hello, What is a systematic basis?
hi, is or should the government be directly related to the purchase of PPE?
Hi, do you have some example question for, if the government grant become repayable.
HI
The split of CL and Non current liability 1800 – 200 = 1600, is the 200 depreciation of the differed income?
Hi,
Yes, in the next reporting period another 200 of the deferred income will be released and so this is the current amount and what is then left is the non-current amount, i.e. the 1,800 – 200.
Thanks
i have just one question , i am studying from the BPP book which is up to June 2018 , are there any changes to the book? , second of all are there any BPP lecture based or are these enough ?
Hi,
There have been changes to the syllabus, with the main one being the introduction of IFRS 16.
Thanks