Problem 24-9 (IFRS) On January 1. 2020, Goddess Company purchased a platire Problem 24-12 (Multiple choice (PAS 20) machine for P5,400,000. The entity received a government I. It is an assistance by government in the form of transfer & Government grant related to depreciable asset is usually recognized as income grant of P400,000 toward the asset cost. resources to an entity in return for past or future Immediately. The machine is to be depreciated on a 20% reducing balag compliance with certain conditions. b. basis over 10 years with residual value of P200,090. Goverment grant C. Over the useful life of the asset using straight line. The accounting policy is to treat the government grant in b, Government assistance Over the useful life of the naset using sum of digits- C. Government donation a. Over the usful life of the asset and in proportion to the depreciation of the asset. reduction in the cost of the asset- d. Government aid What is the carrying amount of the machine on December 2. It is an action by a government designed to provide an 7. Government grant related to nondepreciable asset that 31, 2021? economic benefit specific to an entity and for which requires fulfillment of certain conditions a. 4,000,000 government cannot reasonably place a value. Should not be recognized as income. b. 4,040,000 a. Government grant b. Should be recognized as income immediately. C. 3,456,000 b. Government assistance Should be recognized as income over 40 years. 3,200,000 c. Covernment takeover d. Should be recognized as income over the periods which d. Subvention bear the cost of meeting the conditions. Problem 24-10 (IFRS) 3. Government grant shall be recognized when there is Patriotic Company purchased a machine for P6,600,000 on reasonable assurance that & A government grant that becomes receivable as January 1, 2020 and received a government grant of P600,000 compensation for expenses or losses already incurred should toward the asset cost. a. The entity will comply with the conditions of the grant be recognized as income b. The grant will be received. The accounting policy is to treat the grant as a reduction in C. The entity will comply with the conditions of the grant When received. the cost of the asset. and the grant will be received. b. Of the period in which it becomes receivable. d. The grant must have been received. c. Over a maximum of 5 years using straight line. The machine is to be depreciated on a straight line basis d. Over a maximum of 10 years using straight line. over 10 years with a residual value of P500,000. 4. It is a government grant whose primary condition is that On January 1, 2022, the grant became fully repayable because an entity qualifying for it should purchase, construct or otherwise acquire long-term asset. 9. In the case of grant related to an asset, which of following of noncompliance with conditions. accounting treatment is prescribed? 1. What is the depreciation for 2020? a. Grant related to asset a. Record the grant income in the first year. b. Grant related to income 4. 610,000 b. Either set up the grant as deferred income or deduct it c. Government gift b. 600,000 in arriving at the carrying amount of the asset. d. Government appropriation C. 660,000 C. Record the grant income in the next year. d. 650,000 5. Government grant in recognition of specific costs is d. Disclose only. 2. What is the depreciation for 2022? recognized as income 10. In the case of grant related to income, which of the following accounting treatment is prescribed? a. 610,000 a. Over the same period as the relevant expense. b. 600,000 b. Immediately. a. Credit the grant to equity. b. Present the grant as other income or as a separate line C. 780,000 C. Over a maximum of 5 years using straight line. d. 730,000 d. Over a maximum of 5 years using sum of digits. item, or deduct it from the related expense. C. Credit the grant to retained earnings. Credit the grant to sales