Kitchigami Limited was attracted to the Town of Mornington by the town's municipal industry commission. Mornington donated
Question:
Instructions
(a) Prepare the entry(ies) that are required in 2017 to record the payment to the contractor for the building and the receipt of the provincial government assistance. Assume that the company treats the assistance as a reduction of the asset's cost. Also prepare any adjusting entries that are needed at the company's year ends, December 31, 2017 and 2018.
(b) Repeat (a), but assume instead that the company treats the government assistance as a deferred credit.
(c) If Kitchigami reports 2018 income of $79,000 before depreciation on the plant and government assistance, what income before tax will the company report assuming (a) above Assuming (b) above?
(d) What is the building's tax value at December 31, 2018?
(e) Which method of accounting for government assistance would better represent Kitchigami Limited to a lender? Also, which method would result in higher net income?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Intermediate Accounting
ISBN: 978-1119048534
11th Canadian edition Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Question Posted: