Reference no: EM132782682
On January 2, 2019, Company A was granted 5,000 acres of land in a village located near the slums outside the city limits by a local government authority.
The condition attached to this grant was that Company A should clean up this land and lay roads by employing laborers from the village in which the land is located.
The government has fixed the minimum wage payable to the workers. The entire operation will take three years and is estimated to cost Php 100,000,000.
This amount will be spent this way:
1st year - Php 20,000,000
2nd year- 30,000,000
3rd year- 50,000,000
Problem 1: The fair value of the land is currently Php 120,000,000. How much is recognized as grant income for the year ended December 31, 2020?