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Question 14 {14 marks] Part A Wind Town Is a builder of wind turbines that are used In electricity generation. To encourage the Installation of
Question 14 {14 marks] Part A Wind Town Is a builder of wind turbines that are used In electricity generation. To encourage the Installation of wind turbines and the development of wind power technology, the provincial government has several programs in place that support the Industry. In 2018, Wind Town incurred the following costs that were potentially eligible for government subsidies: a. The company spent $10 million on research and development (Ran); these costs are eligible for a 25% tax credit. The $10 million had been previously expensed. b. For each megawatt of wind power generating capacity installed, the government provides a subsidy of $100,000 to the customer. In 2018, Wind Town installed 17 megawatts for its customers {utility companies). c. Wind Town Is eligible for a full tax rebate on sales tax normally levied on materials used in the construction of its turbine factory. This sales tax amounted to 5% of the materials cost of $35 million. Required: Record the joumai entries for the above transactions using the gross method for government grants. (4 marks) 11|Page A001 331\" Intermediate Accounting Final Exam Summer 2015 Question 14 {14 marks] - co nt'd Part B In 201?, Kitimat Company incurred the following costs. The company adopts the successful efforts method. ine Site Costs incurred in exploration Costs Incurred In Status at and evaluation development 201? year end IAipha 300,000 100,000 Extraction phase Beta 200,000 Abandoned In 2018, a further $1,353,000 was spent on tangible property, plant, and equipment to develop Alpha mining site. Reserves at the beginning of the year were 480,000 panels. During the year, the Corp produced 57,600 barrels of ore. Required: Record the Journal entries in 201T and 2018. Show all calculations. (10 marks)
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