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Hello, regarding gg, what would be the double entry in a situation where it is received for 1-depreciation of an asset , 2-reduction of a expense?
I know that the income is 1-to be credited over the periods in which the asset is depreciated, 2- credited to other income or the related expense over the relevant period.
However, if the Gov gives the entity lets say $20,000 which it would be using over a 5 year period would the double entry in the year it receives the $ be dr cash , cr other income , then as the grant is being used dr other income cr expense/depreciation?…..and for the subsequent years would it be dr other income cr expense/depreciation ?
I’m thinking that the year in which the grant is received by the entity there would be a large cash balance in the sofp which should be “balanced” off by the retained earnings in the sofp?
No, the large cash balance (it may not exist – what if it has been used to partly pay for the asset?) is balanced by the deferred income shown as a liability
Ok?
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