Peach Company purchased a machine for P7, 000, 000 on Jan. 1, 2019 and received a government grant of P1,000,000 toward the capital cost. The machine is to be depreciated or a straight line basis over 5 years and estimated to have a residual value of P500,000 at the ene of this period. Required: Prepare all journal entries for the year 2019 assuming the government grant is accounted for as: 1. Deferred income 2. Pedustion from the sost of the asset
Peach Company purchased a machine for P7, 000, 000 on Jan. 1, 2019 and received a government grant of P1,000,000 toward the capital cost. The machine is to be depreciated or a straight line basis over 5 years and estimated to have a residual value of P500,000 at the ene of this period. Required: Prepare all journal entries for the year 2019 assuming the government grant is accounted for as: 1. Deferred income 2. Pedustion from the sost of the asset
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 29CE
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Transcribed Image Text:Peach Company purchased a machine for P7, 000, 000 on Jan.1, 2019 and received a
government grant of P1,000,000 toward the capital cost. The machine is to be depreciated on
a straight line basis over 5 years and estimated to have a residual value of P500,000 at the end
of this period.
Required:
Prepare all journal entries for the year 2019 assuming the government grant is accounted for
as:
1. Deferred income
2. Deduction from the cost of the asset
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