3-GG - LEctures and notes PDF

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ANGELES UNIVERSITY FOUNDATIONMcArthur Highway, Angeles City, 2009 Contact No.: (63-45) 625-2888 / Email: [email protected] Website: auf.edu/Nicole B. Sanchez BSA- 2A SEATWORK #3: GOVERNMENT GRANTS An entity received a government grant under the following independent situations: An entity received a ...

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ANGELES UNIVERSITY FOUNDATION McArthur Highway, Angeles City, 2009 Contact No.: (63-45) 625-2888 / Email: [email protected] Website: www.auf.edu.ph/ Nicole B. Sanchez BSA- 2A SEATWORK #3: GOVERNMENT GRANTS

1. An entity received a government grant under the following independent situations: An entity received a grant of P30,000,000 from the British government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over four years, respectively, P2,000,000, P4,000,000, P6,000,000 and P8,000,000. 1st year: Cash Deferred Grant Income Deferred Grant income Grant Income Environmental Expenses Cash

30,000,000 30,000,000 3,000,000 3,000,000 2,000,000 2,000,000

2. An entity received a grant of P40,000,000 from the American government for the construction of laboratory and research facility with an estimated cost of P50,000,000 and useful life of 20 years. 1st year: Cash

40,000,000 Deferred Grant Income

40,000,000

Building Cash

50,000,000

Depreciation

2,500,000

50,000,000

Accumulated DepBuilding Deferred Grant Income Grant Income

2,500,000 2,000,000 2,000,000

3. An entity is granted a large tract of land in Cordillera by the Philippine government. The fair value of the land is P50,000,000. The grant requires that the entity shall construct a factory and employ only personnel residing in the Cordillera region. The cost of the factory is P80,000,000 with useful life of 25 years. 1st year: Land Deferred Grant Income Factory Cash Depreciation Accumulated Dep-Factory Deferred Grant Income Grant Income

50,000,000 50,000,000 80,000,000 80,000,000 3,200,000 3,200,000 2,000,000 2,000,000

4. An entity received a grant of P10,000,000 from the Australian government to compensate for massive losses incurred because of a recent earthquake. 1st year: Cash Grant Income

10,000,000 10,000,000...