Recovery Pharmaceutical Limited (RP) undertakes research for a new drug. It needs a machine of $100,000 which has 4 years' life with zero residual value. On 1 January 2018, it obtained a government grant of $30,000 on the condition that the new drug could be invented. Otherwise, the full amount of the grant has to be repaid. On the same day, the machine was purchased. For the year ended 31 December 2018, the progress of the research suggests that a new drug is likely feasible. However, during the year ended 31 December 2019, RP encounters technical difficulties. Its CEO concludes that a new drug may be unlikely. The accounting policy of RP is to depreciate the machine on a straight-line basis and to recognize any grant received or receivable as a deduction from the related asset. Required: In accordance with HKAS 20 Accounting for Government Grants and Disclosure of Goverment Assistance, (a) Prepare accounting journal entries for RP for the years ended 31 March 2018 and 2019. (12 marks) (b) Discuss the impact on the financial statements if HKAS 20 is not followed. (4 marks)