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so the question says that the company “qualified for govt grants for 950,000” … capital grants to be exact.
i did the t account calculations etc … but i lack the understanding of the following:
1. the t account gave a balancing fig of 250k which was called the ‘release of grant’
2. in the investing portion, the entire 950 is listed.my questions/confirmations:
a. when it says “qualified for govt grants..” it means that the 950 cash was given to the company. correct?
b. what is this release?? is it the transfer from deferred income to revenue? what is it?????????//
thanks
thanks. related to this question is the tax in this problem. instead of a tax expense, a 50 amount was given as ‘net income tax credit’.
i did the t account for tax and i also got the right figure of 1350 on the Dr side of the T.
but i figured that if we had a tax credit, the 1350 wd be a tax receipt too. but this was the amount of tax paid.
so, if i looked at the accounting bit, the debit was telling to treat it as a payment, but the tax credit threw me off.
can u please explain.
“Net income tax credit” surely means that the balance of the Current Tax T Account was a 50 credit balance ie there was 50 more credits than debits. So, to balance the account, we need to debit the T Account 50 and credit the statement of profit or loss with 50
OK?
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