Question
Bulb B Limited is a manufacturer of energy-saving efficient light bulbs for residential and commercial use. Due to the number of increases in the electricity
Bulb B Limited is a manufacturer of energy-saving efficient light bulbs for residential and commercial use. Due to the number of increases in the electricity price over the recent months, the demand for energy-saving bulbs has skyrocketed. To help alleviate the energy crisis, the government awarded grants to slight bulb manufacturing companies. Bulb B immediately applied for the grant. On the 1st of July 2021, Bulb B was awarded the government grant of R1 500 000 to purchase the equipment required. Bulb B met all the conditions of the grant by the 30th of June 2021, other than the acquisition of the equipment. Bulb B immediately placed an order for the machine upon receipt of the grant and finally purchased and paid for the equipment on the 1st of September 2021. The acquisition of the equipment cost R4 500 000 and the equipment had an expected useful life of 5 years. The equipment is expected to have a residual value of R200 000 at the end of its useful life.
Required: Prepare the journal entries in Bulb B Limited's books, taking into account, the above transactions for the years ended 30th June 2022 and 30th June 2023.
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