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Chapter 24
Example 2
Capital grant
On 1 April 20X3 an entity receives a government grant of $45,000 towards
machinery costing $300,000. It depreciates all plant and machinery at 20% pa
on a straight-line basis.
Show relevant extracts from the financial statements for the year ended
31 March 20X4 under the net and deferred credit methods in the
proforma below.
Net Deferred
credit
$000 $000
Statement of profit or loss
Depreciation
((300 – 45 grant) × 20%) (51)
(300 × 20%) (60)
Grant income (45 × 20%) – 9
Statement of financial position
Property plant & equipment
(300 – 45 grant – 51 dep’n) 204
(300 – 60 dep’n) 240
Non-current liability: grant – 27
(3 years × 45 × 20%)
Current liability: grant – 9
(1 year × 45 × 20%)
300
