On January 1, 2022, Paula Company purchased a varnishing machine for P6,000,000. The entity received a...

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On January 1, 2022, Paula Company purchased a varnishing machine for P6,000,000. The entity received a government grant of P540,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. 1. What is the carrying amount of the machine on December 31, 2023? 2. What amount should be reported as deferred grant income on December 31, 2023? On January 1, 2022, Paula Company purchased a varnishing machine for P6,000,000. The entity received a government grant of P540,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. 1. What is the carrying amount of the machine on December 31, 2023? 2. What amount should be reported as deferred grant income on December 31, 2023?

Answer rating: 100% (QA)

ANSWER To solve this problem well calculate the depreciation expense for each year and adjust the ca... View the full answer