Grants 1

GOVERNMENT GRANTS EXERCISES 1. The government grants a company a sum of P12 mil on 1 January 2019 to assist in the acquisition of power plant. The power plant was acquired on 1 January 2019 for P90 mil has a useful life of 3 years, and a nil residual value. All conditions attached to the grant, except for the acquisition of the plant, had all been met on date of receipt. REQUIRED: Show the journal entries with narrations in the year ended 31 Dec 2019, 2020 and 2021 assuming: a. The company has the policy of recognising government grants as grant income. b. The company has the policy of recognising government grants as credit to the related assets