Question

Housing Ltd erected a number of houses for its employees at a cost of Rs.1,000,000, which was settled on 1 January 2020 in cash. These buildings, which have a useful life of 10 years, were completed and put into use on 1 January 2020. Housing Ltd received a government grant of Rs.100,000 on 1 January 2020, since the national government regards it as a priority to provide houses for all its citizens. Assume a profit before tax prior to the above transactions of Rs.500,000. Required a. Prepare the journal entries (cash transactions included) for the year ended 31 December 2020 in respect of the above transactions if it is assumed that the government grant is presented in the statement of financial position as deferred income. b. Prepare the journal entries (cash transactions included) for the year ended 31 December 2020 in respect of the above transactions if it is assumed that the government grant is presented in the statement of financial position by deducting the government grant from the carrying amount of the asset​

Answer 1

Answer:

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