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Quiz Chapter-18 Govt-Grants

The document discusses government grants and how they are accounted for under PAS 20. It provides examples of how to account for a non-monetary government grant used to construct a building, including calculating income from the grant, carrying amounts of the building, and depreciation expense over multiple years under gross and net presentation methods.

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jiachi.04212004
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964 views2 pages

Quiz Chapter-18 Govt-Grants

The document discusses government grants and how they are accounted for under PAS 20. It provides examples of how to account for a non-monetary government grant used to construct a building, including calculating income from the grant, carrying amounts of the building, and depreciation expense over multiple years under gross and net presentation methods.

Uploaded by

jiachi.04212004
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Page |1

Chapter 18
Government Grants
NAME: Date:
Professor: Section: Score:

QUIZ:
1. According to PAS 20, non-monetary grants are measured at
a. the fair value of the non-monetary asset.
b. nominal amount.
c. the amount of cash received or receivable.
d. a or b

2. According to PAS 20, government grants are presented in the financial statements using
a. a gross presentation. c. a or b
b. a net presentation. d. a functional presentation.

Use the following information for the next three questions:


On January 1, 20x1, Entity A received land with fair of ₱200,000 from the government conditioned
on the construction of a building on the lot. Entity A started immediately the construction and it was
completed on December 31, 20x1 for a total cost of ₱1,000,000. The building has an estimated useful
life of 10 years and zero residual value.

3. How much is the income from government grant in 20x1 and 20x2, respectively?
20x1 20x2
a. 0 200,000
b. 200,000 0
c. 0 20,000
d. 20,000 20,000

4. How much is the carrying amount of the building on December 31, 20x2 under the following
presentations?
Gross presentation Net presentation
a. 1,000,000 800,000
b. 900,000 720,000
c. 800,000 640,000
d. 800,000 533,333

5. How much is the depreciation expense recognized in 20x3 under the following presentations?
Gross presentation Net presentation
a. 100,000 80,000
b. 100,000 100,000
c. 80,000 100,000
d. 80,000 80,000

“A fool shows his annoyance at once, but a prudent man overlooks an insult.”
(Proverbs 12:16)
- END -
Page |2

SOLUTIONS:

1. D
2. C

3. C 20x1 = 0, no depreciation yet is recognized from the building; therefore, no income yet is
recognized from the government grant (i.e., ‘matching’). The building starts to be depreciated in
20x2.
20x2 = 20,000 (200,000 ÷ 10 years)

4. B Gross presentation: (1M x 9/10) = 900,000;


Net presentation: (1M – 200K) x 9/10 = 720,000

5. B Gross presentation: (1M ÷ 10) = 100,000;


Net presentation: (1M – 200K) ÷ 10 = 80,000

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