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Falmer Co is a telecommunications service provider which receives government assistance to provide telecommunications service to remote areas. Falmer Co invested in a new server
Falmer Co is a telecommunications service provider which receives government assistance to provide telecommunications service to remote areas. Falmer Co invested in a new server at a cost of 800,000 on 1 December 2020. The server has an estimated useful life of ten years with a residual value equal to 20% of its cost. Falmer Co uses straight-line depreciation on a time apportioned basis. The company received a government grant of 30% of its cost price of the server at the time of purchase. The terms of the grant are that if the company retains the asset for four years or more, then no repayment liability will be incurred. Falmer Co has no intention of disposing of the server within the first four years. Falmer Co's accounting policy for capital-based government grants is to treat them as deferred income and release them to income over the life of the asset What is the net amount that will be charged to operating expenses in respect of the server for the year ended 28 February 2021? Your answer is
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