QUESTION 2: Part 1: On 1 Jan 2018 Co A acquires equipment for its manufacturing plant and receives a government grant of 400,000 towards its cost. The equipment costs 1,200,000 and has a useful life of five years. Its residual value is nil. It is depreciated on a straight- line basis. Requirement: Explain how the grant will be dealt with in the financial statements and show workings and relevant entries in Income Statement and Balance sheet for the year ended 31 Dec 2018 if: (i) the grant is treated as deferred income (ii) the grant is deducted from the cost of the asset. Part 2: Co D acquires a machinery for 700,000 on 1 Jan 2008. This machinery is depreciated on a straight-line basis over its useful economic life which is estimated to be 20 years. On 1 Jan 2016, the company revalues the machinery to be 540,000 using revaluation model. The machinery was sold on 1 Jan 2019 for 470,000. Co D's year end is 31 Dec. Required: A. Clearly show cost, accumulated depreciation and carrying value of the machinery as of 1 Jan 2016 before revaluation. Show accounting entries on 1 Jan 2016 when plant is revalued. B - Show accounting entries on disposal of the machinery on 1 Jan 2019