Reference no: EM132787254
On 1 July 2017, Telus Bhd received a government grant of RM650,000 to acquire a plant. The fair value of the plant is RM3,200,000. The expected useful life of the plant is 50 years with a nil residual value. The company adopts the straight-line monthly basis method of depreciation. Telus Bhd treats the grant received as a deduction against the asset.
On 1 January 2020, Telus Bhd no longer comply to the condition attached to the grant and the grant has become repayable in full.
The financial year of Telus Bhd ends on every 31 December.
Problem 1. Based on the paragraph above, the relevant journal entry for the year ended 31 December 2019 is:
a) Dr SOPL depreciation RM51,000; Cr Accumulated Depreciation RM51,000.
b) Dr SOPL depreciation RM64,000; Cr Accumulated Depreciation RM64,000.
c) Dr SOPL Deferred Income RM13,000; Cr Government Grant RM13,000.
d) Dr Government Grant RM13,000; Cr SOPL Deferred Income RM13,000.
Problem 2. Based on paragraph above, the carrying amount of plant as at 31 December 2019 is:
a) RM3,008,000
b) RM3,040,000
c) RM2,422,500
Problem 3. In the absence of the grant, the accumulated depreciation of the plant on 1 January 2020 is:
a) RM192,000
b) RM127,500
c) RM160,000
d) RM153,000
Problem 4. The relevant journal entry to record the grant repayable on 1 January 2020:
a) Dr Plant RM650,000; Dr Loss arising on grant repayable RM32,500; Cr Grant repayable RM650,000; Cr Accumulated depreciation RM32,500
b) Dr Plant RM650,000; Dr Accumulated depreciation RM32,500; Cr Grant repayable RM650,000; Cr Gain arising on grant repayable RM32,500
c) Dr Plant RM650,000; Dr Loss arising on grant repayable RM39,000; Cr Grant repayable RM650,000; Cr Accumulated depreciation RM39,000
d) Dr Plant RM650,000; Dr Accumulated depreciation RM39,000; Cr Grant repayable RM650,000; Cr Gain arising on grant repayable RM39,000
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