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During 2020, $2,500,000 was provided by the federal government for capital improvements made to certain retail outlets. In 2020, the federal government legalized the sale of cannabis, and PLC will be solely responsible for its sale and distribution in the province. The funding was provided to assist with the renovations needed to some retail outlets to make them suitable for the expanded sales. The retail outlets are leased by PLC with an average lease term of 10 years. Total leasehold improvements in 2020 cost $11,000,000. PLC claims a full year of depreciation in the year of acquisition, regardless of the acquisition date of the asset. The grant carries no specific conditions. The money received has simply been reported as "revenue from Feds" on the statement of comprehensive income.
Problem 1: Analyze PLC's accounting for government assistance using IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.
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