IA1 Valix: Government Grants (2021) p. 715
At the beginning of the current year, Darwin Company purchased a plating
machine for P5,400,000. The entity received a government grant of P400,000
toward this capital cost.
The machine is to be depreciated on a 20% reducing balance basis over 10 years.
The estimated residual value is P200,000.
Required:
Prepare journal entries for the current year, assuming the grant is accounted for
as deferred income and deduction from asset.