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A manufacturing entity is entitled to a grant of $3 million for creating
50 jobs and maintaining them for three years. $1.5m is received
when the jobs are created and the remaining $1.5m is receivable
after three years, provided that the 50 jobs are still in existence. The
entity creates 50 jobs at the beginning of year one and there is
reasonable assurance that this level of employment will be
maintained.
What is the deferred income balance at the end of the first
year?Doubt – how will govt grant be written off to SOPL for remaining years ? what will be the journal
entries for the same ?Hi,
I’m not here to just answer a question for you. You need to attempt it first and then I can explain where you are going wrong. It is better for your learning to do it that way.
With regards to your doubt then any deferred income balance, a credit on the SFP, is then released each year via the following double entry DR Deferred Income CR Revenue
If you get back to me with an answer for the first part of your post, I’ll get on with giving you an explanation of where you might be going wrong.
Thanks
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