E.S.S Limited bought equipment valued at $5,100,000 to be used in controlling pollution in their area of operation. The government has decided to assist the company by granting the company a subsidy of 50% of the value of the asset. The equipment qualifies as a depreciating asset according to IAS 20, Government Grants and is depreciated over a period of 4 years. Its residual value is expected to be nil.

Required:

a) Prepare extracts of E.S.S Limited's Income statement and statement of financial position to account for the first three (3) years for the above items using the deferred income method