Sir, here is a bit headache.
A company receives a government grant of $500000 on 1 April 20×7 to facilitate purchase on the same day of an asset which costs 750000. The asset has a five year useful life and depriciafed on a 30% reducing balance.
Company is to account for all grants received as deferred income.
What amount if income will he recognised in respect of of the grant in the year to 31 march?
Pleaseee?
Ask the Tutor ACCA FR
Grants
first year initial recognition it will be full amount of 500 recognised but not realised:
Dr Cash 500
Cr Deferred income 500
then after that each year 30% reducing balance depN will be deducted from Deferred income liability acc and credited to P/L
Dr Deferred INcome 105
Cr P/L Cost of sales 105
correct? so first year recognised income is 150 or 500?
pls explain sir
30% of $500,000 recognised in year 1 statement of profit or loss leaving $350,000 for future years
30% of $350,000 recognised in year 2 statement of profit or loss leaving $245,000 for future years
30% of $245,000 recognised in year 3 ststaement of profit or loss leaving $171,500 for future years
30% of $171,500 recogn........
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