Situation 1 On January 1, 2020, another entity purchased equipment costing P4,800,000 with a 6-year useful life, no residual value and used the cost model. On January 1, 2022, the entity elected to use the revaluation model. On such date, the replacement cost of the asset is P7,500,000. The entity restated its accumulated depreciation proportionately. The income tax rate is 30%. Situation 2 On January 1, 2020, an entity purchased equipment at a cost of P12,000,000 that has an 8-year useful life. The entity used the SYD method of depreciation. On the same date, the entity received a government grant of P3,600,000 towards the purchase of the equipment. The entity used the deferred income approach in accounting for the grant. On January 1, 2022, the entity violated some conditions attached to the grant and therefore returned the entire subsidy.
Situation 1 On January 1, 2020, another entity purchased equipment costing P4,800,000 with a 6-year useful life, no residual value and used the cost model. On January 1, 2022, the entity elected to use the revaluation model. On such date, the replacement cost of the asset is P7,500,000. The entity restated its accumulated depreciation proportionately. The income tax rate is 30%. Situation 2 On January 1, 2020, an entity purchased equipment at a cost of P12,000,000 that has an 8-year useful life. The entity used the SYD method of depreciation. On the same date, the entity received a government grant of P3,600,000 towards the purchase of the equipment. The entity used the deferred income approach in accounting for the grant. On January 1, 2022, the entity violated some conditions attached to the grant and therefore returned the entire subsidy.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 7P: Deferred Tax Liability: Depreciation At the beginning of 2019, its first year of operations, Cooke...
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What is the revaluation surplus on December 31, 2022?
What amount of income from grant is recognized for the year 2021?
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