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An entity is given $300,000 on 1 January 20X1 to keep staff employed within a deprived area. The entity must not make redundancies for the next three years, or the grant will need to be repaid.
sir if we are not offsetting the above grant against admin expense, and showning it separately in SPL then what will be accounting entry fo reversal in year 2 and year 3 if the conditions are breached and grant is taken back?
after year 1 entry i believe would be Dr. SPL 100 Dr. CL 100 Dr. NCL 100 and Cr. Cash 300.
but am unsure of the JOURNAL entry if reversal takes place after yr 2 and yr3. sir if you could shed some light on this?
If you have to give back money
Dr P&L Cr Liability with whatever you have already credited to P&L – could be 1, 2 or 3 years’ worth
Then Dr Liability Cr Cash to repay