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P2-D2.
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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Government Grant (Deduct from the Asset)
Dear Chris,
I hope you are well and safe,
thank you so much for your nice explanation and your humour I do enjoying watching your lectures and study ACCA.
In respect of the government grant we have to method as per IAS 20 for capital Asset are as follow,
1- Deduct the government grant of the assets acquired.
2- treating the government grant as deferred income.
in regarding to method number 2 I understand it very well, but regarding the first treatment it’s somehow confused for example it’s mentioned in Kaplan textbook the following
Given information,
government grant=$15000 and had been used to buy capital equipment as follow,
Asset acquired =$100000
Estimated useful life = 5 years.
Required
The presentation of (SFP) and (SPL) at the end of the year.
**** The solution as per my understanding in details as follow,
the recognition of the government grant is as follow
Dr Bank $15000
Cr Deferred income (SFP) $15000
the entry of the asset recognition
Dr PPE(SFP) $85000
Dr Deferred income(SFP) $15000 as liability account
Cr Bank $100000
The annual depreciation of the year =85,000/5yrs = $17,000
Dr Depreciation Expense $17,000
Cr Accumulated Depreciation $17,000
the presentation of the financial position
Non-current assets.
PPE (C.V) $68,000
The presentation of the profit or loss and OCI
Depreciation expense(SPL) $17,000
Could you check out my workout, please? and tell me correction.
Thank you in advance.
Hi,
I’d love to be able to go through each of your solutions to check if they are correct but I do not have the time to do so. Similar to my response to your previous post, do you not have a model answer to compare your answer to?
Thanks