1. During 2020, Peach Company purchased machine for P7,0000,000 and received a government grant of P1,000,000 toward capital cost.

The machine is to be depreciated on a straight-line method basis over 5 years and estimated to have residual value of P500,000 at the end of the period.

Required:

Prepare journal entries using Deferred Approach and Deduction from Asset Approach.