Chapter 18

Government Grants

PROBLEM 1: TRUE OR FALSE

1. TRUE
2. FALSE 0
3. TRUE
4. TRUE
5. FALSE 0
6. TRUE
7. TRUE
8. TRUE
9. TRUE
10. FALSE (2M x 9/10) = 1.8M

PROBLEM 2: FOR CLASSROOM DISCUSSION

1. C
2. C
3. B
4. B

5. Answer: 0

6. Solution:
(6M – 1M) x 29.25/30 + 1M = 5,875,000

7. Solution:
(2M / 30 yrs.) x 9/12 = 50,000

8. Solution:
(6M – 1M) ÷ 30 x 9/12 = 125,000

9. Solution:
(2M x 29.25/30 = 1,950,000

10. Solution:
(6M – 2M – 1M) x 29.25/30 + 1M = 3,925,000

11. Solution:
(6M – 2M – 1M) ÷ 30 x 9/12 = 75,000

12. Solution:
(1.8M x 4 mos. / 6 mos.*) = 1,200,000

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*The income can be recognized on a straight-line basis because the related
costs were incurred evenly.

13. Solution:
(1.8M x 2/6) = 600,000

14. Solution:
(2.7M x 4/6) – (1.8M x 4/6) = 600,000

15. Answer: 200,000

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PROBLEM 6: MULTIPLE CHOICE: COMPUTATIONAL
1. D

2. A (150,000 x 2/4) = 75,000; (13,500 x 2/4) = 6,750

3. D (360,000 – 50,000 – 5,000) ÷ 8 = 38,125

4. C (135,000 – 13,500) = 121,500 net historical cost;

121,500 x 80%* x 20% = 19,440

* 100% - 20% double declining balance rate = 80%