Reference no: EM132996033

On January 1, 2021, NCT Company purchased an equipment for P8,000,000 and received a government grant from the Municipality of Heist of P2,000,000 with respect to this asset. The grant requires the entity to use the equipment to produce products that will be sold to the nearby community at 20% less of the original selling price. The equipment is to be depreciated on a straight-line basis and estimated to have useful life of 10 years. Also, Marseille Company received a P1,000,000 grant in cash from the Provincial Capital of La Casa from a clean-up project of Papel River that NCT Company is about to start in the current year. The clean-up drive is expected to start in 2021 and ends in 2023 (three years). As of January 1, 2021, the expected to total cost of cleaning the Papel River were: 2021 - P800,000; 2022 - P1,200,000; and 2023 - P3,000,000.

Problem 1: How much is the amount of Income from government grant that NCT Company should recognized in its 2021 Statement of Comprehensive Income assuming that NCT follows the pattern of expected expenses related to the grants?