• BonitaEnterprises purchased a new piece of equipment for its factory under a new government incentive program in exchange for cash.The equipment cost $149,000and had an estimated useful life of10years. The program was intended to encourage companies to invest in new, innovative technologies.The new piece of equipment purchased byBonitaqualified for a government grant of $20,400.Bonitacollected the grant after providing proof of the purchase.
• Assuming that Bonita uses the cost reduction method, prepare the journal entries to record the purchase of the equipment and the receipt of the government grant.(Credit account titles are automatically indented when the amount is entered.Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To record purchase of equipment)

(To record collection of government grant)

• Assuming that Bonita uses the deferral method, prepare the journal entries to record the purchase of the equipment, the receipt of the grant, and the adjusting entry required at the end of the first year (assuming the equipment was purchased on the first day of the fiscal year).(Credit account titles are automatically indented when the amount is entered.Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To record purchase of equipment)

(To record collection of government grant)

(To record year end adjusting entry)