Bolton Company ("Bolton") is a nutrition company. Where applicable, on recognition of a capital grant, it is the policy of Bolton to treat the grant as a deferred income/credit.

The governments Department of Education provided funding for 40% of the cost of a new catering facility. Bolton purchased the new facility on 1 January 2020 for 1,200,000. Bolton adopts a policy of straight-line depreciation, charging a full years depreciation in the year of acquisition. The estimated useful life of the facility is 50 years.

Explain, together with journals (accounting entries), how the grant above should be accounted for in the financial statements for the year to 31 December 2020