On 1 January 2019, Dynamic Bhd received a government grant of 25% of the cost of the asset from the Ministry of Agriculture in relation to the acquisition of machinery costing RM12,000,000. The useful life of the machinery is expected to be 10 years with a residual value of RM100,000. To partly finance its acquisition, the company issued ordinary shares at the issue price of RM1.80. The company adopts the deferred income method for the treatment of the government grant. On 1 January 2021 , the company failed to comply with the conditions attached to the grant by the Ministry of Agriculture. 1. Which of the following accounting treatment of the government grant on 1 January 2019 is correct? a. Dynamic Bhd should credit ordinary share capital of RM12,000,000. b. Dynamic Bhd should credit deferred income account and amortize the grant received to SOPL over the useful life of the machinery. c. Dynamic Bhd should recognise the total government grant of RM3,000,000 as an income. d. Dynamic Bhd should include the amount of grant received as part of the cost of the machinery and provide depreciation based on RM12,000,000. (2 marks) 2. Based on the scenario above, the relevant journal entry during the financial year ended 31 December 2019 is: a. Dr Amortization of Deferred Income - in SOPL RM300,000; Cr Deferred Income - government grant RM300,000 b. Dr Depreciation - in SOPL RM1,190,000; Cr Accumulated Depreciation RM1,190,000 c. Dr Depreciation - in SOPL RM1,200,000; Cr Accumulated Depreciation R. R1,200,000 d. Dr Amortization of Deferred Income - in SOPL RM300,000; Cr Bank RM300,000 (2 marks) 3. Calculate the carrying amount of deferred government grant income as at 31 December 2020. a. RM2,700,000 b. RM2,400,000 c. RM9,600,000 d. RM9,000,000 (2 marks)