Answered

Discover answers to your most pressing questions at Westonci.ca, the ultimate Q&A platform that connects you with expert solutions. Experience the ease of finding quick and accurate answers to your questions from professionals on our platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

Cranston LTD. prepares its financial statements according to International Financial Reporting Standards. In October 2021, the company received a $5 million government grant. The grant represents 20% of the total cost of equipment that will be used to improve the roads in the local area. Cranston recorded the grant and the purchase of the equipment as follows: Cash 5,000,000 Revenue 5,000,000 Equipment 25,000,000 Cash 25,000,000 Required: 2. Prepare the correcting entries required under the two alternative accounting treatments allowed under IFRS.

Sagot :

abiolataiwo2015

Answer:

Alternative 1:

Debit Revenue $5,000,000

Credit Equipment $5,000,000

Alternative 2:

Debit Revenue $5,000,000

Credit Deferred revenue $5,000,000

Explanation:

Preparation of the correcting journal entries required under the two alternative accounting treatments allowed under IFRS

Based on the information given if in the October 2021, the company received the amount of $5 million as government grant in which we were told that the grant represents 20% of the total cost of equipment which means that the correct journal entries required under the two alternative accounting treatments allowed under IFRS will be :

Alternative 1:

Debit Revenue $5,000,000

Credit Equipment $5,000,000

Alternative 2:

Debit Revenue $5,000,000

Credit Deferred revenue $5,000,000

Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.