Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 35 views

    Classification of Grant

    Uploaded by

    Catherine Joy Morales
    This document discusses the classification and accounting treatment of government grants. It outlines two types of grants: (1) grants related to assets, which are treated as deferred income and recognized over the asset's useful life; and (2) grants related to income, which are presented in the income statement when the related expenses are incurred. It provides examples of journal entries to account for grants related to depreciable assets, showing the deferred income being recognized over the asset's useful life proportionate to depreciation expense.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Classification of Grant

    Uploaded by

    Catherine Joy Morales
    35 views1 page
    This document discusses the classification and accounting treatment of government grants. It outlines two types of grants: (1) grants related to assets, which are treated as deferred income and recognized over the asset's useful life; and (2) grants related to income, which are presented in the income statement when the related expenses are incurred. It provides examples of journal entries to account for grants related to depreciable assets, showing the deferred income being recognized over the asset's useful life proportionate to depreciation expense.

    Original Description:

    Read and learn

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses the classification and accounting treatment of government grants. It outlines two types of grants: (1) grants related to assets, which are treated as deferred income and recognized over the asset's useful life; and (2) grants related to income, which are presented in the income statement when the related expenses are incurred. It provides examples of journal entries to account for grants related to depreciable assets, showing the deferred income being recognized over the asset's useful life proportionate to depreciation expense.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    35 views1 page

    Classification of Grant

    Uploaded by

    Catherine Joy Morales
    This document discusses the classification and accounting treatment of government grants. It outlines two types of grants: (1) grants related to assets, which are treated as deferred income and recognized over the asset's useful life; and (2) grants related to income, which are presented in the income statement when the related expenses are incurred. It provides examples of journal entries to account for grants related to depreciable assets, showing the deferred income being recognized over the asset's useful life proportionate to depreciation expense.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Classification of Grant

    a. Grant related to asset


    -qualifiying for the grant shall purchase, construct or otherwise acquire long term asset.
     Setting grant as deferred income
     Deducting the grant in arriving of the carrying amount of asset

    *Subsidiray conditons; attached restricting the type, location of the asset or the periods during which
    the asset is to be acquire or held.

    b. Grant related to income


    -grant other than related to asset.
     Grant is presented in the income statement, either separately or under the head of “other
    income”
     Grant is deducted from the related expense.

    *gov grant shall recognized as income on systematic basis over the period on which an entity
    recognizes as expense the related costs for which the grant is intended to compensate.

    *in other words, grant is taken to income when related cost is incurred.

    Proforma

    Cost of land/building Received Grant 1st year - *dr. deferred income (10/10
    Divided by: useful life Divided by: useful life x received grant)
    =Depreciation =income from gov grant Cr. Income from gov grant
    *dr. cash 2nd year -*dr. deferred income (9/10 x
    Cr. Deferred income received grant)
    (received grant) Cr. Income from gov grant

    *Grant related to depreciable asset shall be recognized as income over the periods and in proportion to
    the depreciation of the related asset.

    ^^Dr. cash
    Cr. Deferred income (cash received)
    ^^Dr. Building
    Cr. Cash
    ^^Dr. depreciation
    Cr. Accum Depreciation (cost of bldg / useful life)

    ^Dr. Deferred Grant income


    Cr. Grant income (received grant / useful life)

    *Grant related to non-depreciable asset requiring fulfillment of certain conditions shall be recognized as
    income over the periods which bear the cost of meeting the conditions.
    ^^SYD (cost – residual value) x 10/useful life = depreciation expense
    2nd year (cost – residual value0 9/ useful life) = D.E

    *Gov grant that becomes recievable as compensation for expenses or losses already incurred or for the
    purpose of giving immediate financial support to the entity with no further related shall be recognized as
    income of the period in which it becomes recievable.

    You might also like