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Chapter 16 Problem Solving

The document contains journal entries recording the receipt and use of government grants for environmental projects over multiple years. It also includes calculations of depreciation amounts for equipment purchased with the grants. Key details include: - Grants of $30M, $40M, and $50M were received in the first three years and deferred as income. As expenses were incurred, portions of the grants were recognized as income. - Land, buildings, and factories were acquired with the cash from grants and depreciation was recorded against accumulated depreciation accounts. - Later problems show the calculation of depreciation amounts on equipment based on cost, residual value, and depreciation periods.

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62 views3 pages

Chapter 16 Problem Solving

The document contains journal entries recording the receipt and use of government grants for environmental projects over multiple years. It also includes calculations of depreciation amounts for equipment purchased with the grants. Key details include: - Grants of $30M, $40M, and $50M were received in the first three years and deferred as income. As expenses were incurred, portions of the grants were recognized as income. - Land, buildings, and factories were acquired with the cash from grants and depreciation was recorded against accumulated depreciation accounts. - Later problems show the calculation of depreciation amounts on equipment based on cost, residual value, and depreciation periods.

Uploaded by

WeStan Legends
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 16 Problem Solving

Problem 16-1
Journal entries for the first year to record independent government grant:

1.

Cash 30,000,000
Deferred grant income 30,000,000

Deferred grant income 3,000,000


Grant income 3,000,000

Environmental expenses 2,000,000


Cash 2,000,000

2.

Cash 40,000,000
Deferred grant income 40,000,000

Building 50,000,000
Cash 50,000,000

Depreciation expense 2,500,000


Accumulated depreciation 2,500,000

Deferred grant income 2,000,000


Grant income 2,000,000

3.

Land 50,000,000
Deferred grant income 50,000,000

Factory 80,000,000
Cash 80,000,000

Depreciation Expense 3,200,000


Accumulated depreciation 3,200,000

Deferred grant income 2,000,000


Grant income 2,000,000
4.
Cash 10,000,000
Grant income 10,000,000

Problem 16-5
Journal Entries for the current year

a. Deferred income

Equipment 5,400,000
Cash 5,400,000

Cash 400,000
Deferred income 400,000

Depreciation Expense 1,040,000


Accumulated depreciation 1,040,000

Cost of equipment 5,400,000


Residual value ( 200,000)
Depreciable Amount 5,200,000

First year depreciation (5,200,000 x 20%) 1,040,000

Deferred grant income 40,000


Grant income 40,000
(400,000/10 years)

b. Deduction from asset

Equipment 5,400,000
Cash 5,400,000

Cash 400,000
Deferred income 400,000

Depreciation expense 960,000


Accumulated depreciation 960,000

Cost of equipment 5,400,000


Government grant (400,000)
Net cost 5,000,000
Net cost 5,000,000
Residual value (200,000)
Depreciable amount 4,800,000

First year depreciation (4,800,000 x 20%) 960,000

Problem 16-6

2
First year (2020) (60,000,000 x ) d. 4,000,000
30

Problem 16-9

1.

Annual depreciation (3,000,000/ 4 years) 750,000

Cost of equipment 3,000,000


Depreciation (750,000)
2020 carrying amount b. 2,250,000

2.

First year (2020) (500,000/ 4 years) b. 125,000

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