Reference no: EM132862435

Question - Racquel Company purchased a machine for P3,000,000 on January 1, 2020. The entity received a government grant of P500,000 in respect of this asset.

The policy is to depreciate the asset over 5 years on a straight line basis and to treat the grant as deferred income.

On January 1, 2022, the grant became fully repayable because of noncompliance with conditions.

Required -

1. Determine the Deferred Grant Income reported in the company's statement of financial position as of December 31, 2021. if deferred income approach was used.

2. Determine the Machinery - net reported in the company's statemment of financial position as of December 31, 2021, if deduction from asset approach was used.

3. Determine the Depreciation expense reported in the statement of profit of loss for 2022, if deduction from asset approach was used

4. Determine the Amount of loss on noncompliance with the conditions of the grant.