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How the government grant should be accounted

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Resort Home Bhd. (Resort Home) has been awarded a concession by the Government to build and operate a holiday resort at Cebu Island for a period of fifty years. Resort Home will be given a government grant of RM300,000 if it can meet the obligation of building a sketch of road and maintaining it during the concession period. The stretch of road will link the resort to the main jetty of the island. The construction costs of the road amounted to Rm800,000. It should be depreciated on straight-line basis. A partial payment amounting to RM100,000 of the grant was received by the company at the beginning of year 2015 and the remaining amount after six months. The construction of the holiday resort and road were completed on end of,February 2016. These have been in operation since end of June 2016.

Required:

Problem 1: Explain how the above government grant should be accounted for as at 31 December 2016

Reference no: EM132588090

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