Rialto Group received a grant from the government of £100,000 to acquire £500,000 of delivery equipment on January 2, 2019. The delivery equipment has a useful life of 5 years. Rialto uses the straight-line method of depreciation. The delivery equipment has a zero residual value.
Instructions
a. If Rialto Group reports the grant as a reduction of the asset, answer the following questions.
1. What is the carrying amount of the delivery equipment on the statement of financial position at December 31, 2019?
2. What is the amount of depreciation expense related to the delivery equipment in 2020?
3. What is the amount of grant revenue reported in 2019 on the income statement?
b. If Rialto Group reports the grant as deferred grant revenue, answer the following questions.
1. What is the balance in the deferred grant revenue account at December 31, 2019?
2. What is the amount of depreciation expense related to the delivery equipment in 2020?
3. What is the amount of grant revenue reported in 2019 on the income statement?