Question
Sporty Camp (Sporty) received a government grant for its aging clubhouse on November 1, 2019. The grant was for $50,000, and the new clubhouse costs
Sporty Camp (Sporty) received a government grant for its aging clubhouse on November 1, 2019. The grant was for $50,000, and the new clubhouse costs $180,000, which Sporty will depreciate on a straight-line basis over its useful life of 20 years. The clubhouse construction was completed on January 1, 2020. Sporty applies IFRS and uses the gross method to present government grants.
Which of the following statements about how to account for this government grant is true?
Question options:
| A | The grant will be recognized in income on a straight-line basis over the life of the building. |
| B | The grant will be recognized in income when received. |
| C | The grant will be used to reduce the carrying value of the asset. |
| D | The grant will be deferred and recognized at the end of the useful life of the asset. |
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