On 1 June 1999, a company buys an item of plant costing £12,000 and receives a government grant of £3,000 towards this cost. The plant is to be written off on the straight-line basis over five years, with an estimated residual value of £nil. The company's annual accounting date is 31 May.

Required:

Prepare ledger accounts showing how the plant and the government grant will be accounted for (in accordance with SSAP4) during the two years to 31 May 2001. How will the government grant be reflected in the company's balance sheet?