Q1. Use the following information to answer Q1a and Q1b.

On Jan 1, 2019 Silver Mine Inc, received a grant of $100,000 from the local government to acquire foundry equipment. The equipment cost $2,000,000. It had a life of 5 years and no residual value. Silver Mine uses straight-line depreciation.

Q1a. Assume Silver Mine reports the grant as deferred grant revenue. [ mark for each wholly correct answer].

		Dr.	Cr.
Jan 1,2019
	Record purchase of the foundry equipment

What is the balance in the deferred grant revenue account after adjusting and closing entries have been completed on Dec 31, 2019?

Answer: $

What is the amount of accumulated depreciation related to the foundry equipment after adjusting and closing entries have been completed 0n Dec 31, 2020?

Answer: $

What amount of grant revenue will Silver Mine recognize in 2021?

Answer: $

Q1b. Assume Silver Mine reports the grant as a reduction of the asset. [ mark for each wholly correct answer].

What is the carrying value of the foundry equipment after adjusting and closing entries have been completed on Dec 31, 2019?

Answer: $

What is depreciation expense related to the foundry equipment in 2020?

Answer: $

What amount of grant revenue will Silver Mine recognize in 2021?

Answer: $

How much lower will the income of Silver Mine be over the 5-year period, when it reports the grant as a reduction of the asset instead of deferred revenue?

Answer: $