QUESTION # 4 (4 marks) (8 minutes) MARK /4

Pharmaceutical Inc. (PI) a public company has researchers working on the development of a vaccine for Covid-19. From March 2020 to December 2020 they completed research for a potential vaccine at a cost of $500 million. On April 1, 2020, the federal government provided a forgivable loan of $200 million to help subsidize PIs research costs. The loan will be forgiven if PI provides the federal government with 50 million doses of the vaccine by the spring of 2021.

Required:

1) Provide the journal entries for the recognition of the research costs and the government assistance assuming that PIs testing trials indicate a successful vaccine and that the doses of the vaccine will be delivered. If there are alternatives identify the alternatives and provide journal entries for each of the alternatives.

2) Provide the journal entries for the recognition of the research costs and the government assistance assuming that PI is uncertain if the vaccine will be effective and completed by spring of 2021. If there are alternatives identify the alternatives and provide journal entries for each of the alternatives