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Problem 1: An entity purchased a machine for P8,500,000 on January 1,2020 and received a government grant of P1,000,000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of asset. The machine is to be depreciated on a straight line basis over 5 years with residual value of P500,000. On January 1, 2022, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2023?
Option 1: 1,500,000
Option 2: 1,600,000
Option 3: 1,200,000
Option 4: 1,400,000
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