You are employed as a financial reporting consultant for a large supermarket chain called Pipers plc with

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Question:

You are employed as a financial reporting consultant for a large supermarket chain called Pipers plc with a year end of 31 August 2022. You have received the following email from them asking for advice. Hello, There are a couple of financial reporting issues that I need to ask your help on as to how to account for them. Can you have a look at them and reply with figures/adjustments needed a full explanation of why? The following information is relevant:

Receipt of a Government Grant.

On 1 September 2020 we changed our air conditioning system in all its stores for a new more environmentally friendly model in all our stores. This energy saving move qualified for a government green grant to help fund the new system. The cost of the new systems in all stores was £20,000,000, and the green grant received towards this was £10,000,000. The air conditioning system is expected to have a useful life of 10 years with no residual value. We want to consider all options of accounting for the grant. Also we would like to know how treatment of a Government Grant differ had we been following UK GAAP.

Reply to the email from the client, providing an explanation of the accounting and reporting treatment and where relevant any calculations required.