ACCA · Question 14 · Government Grants
Section A
GreenEnergy Co received a $200,000 government grant on 1 January 20X3 to purchase a solar array costing $1,000,000 with a 10-year useful life. GreenEnergy accounts for grants as deferred income. On 1 January 20X5, due to a breach of conditions, the entire grant had to be repaid. What is the immediate impact on profit or loss on 1 January 20X5 upon repayment?
Answer options:
An expense of $200,000
An expense of $40,000
An expense of $160,000
No impact, it is capitalized into the asset cost
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