Question

The company received government grants equipment equal $600,000 on Jan. 1, 2019, the useful life of...

The company received government grants equipment equal $600,000 on Jan. 1, 2019, the useful life of the equipment is 4 years.

Record the transaction on Jan. 1, 2019 and prepare the required entries on Dec. 31, 2019.

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Answer #1

Following entries will be passed where equipment is received from the government in the form of a grant:

Date Account title and explanations Debit Credit
Jan 1, 2019 Cash    6,00,000
Deferred Income 6,00,000
(Being receipt of equipment as governemnt grant recorded)
Dec. 31, 2019 Deferred Income    1,50,000
Income from government grant 1,50,000
(Being income from govt. grant recorded)
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