(a) What is the carrying amount of the delivery equipment , the amount of depreciation expense , and the amount of grant revenue related to the equipment at December 31, 20X1 or in 20X1 (1) if ABC Co. reports the grant for the equipment as a reduction of the asset. (2) if ABC Co. reports the grant for the equipment as deferred grant revenue.

題組內容

2. ABC Co. received a grant from the government of £200,000 to acquire £600,000 of delivery equipment on January 2, 20X1. The delivery equipment has a useful life of 4 years. ABC Co. uses the straight-line method of depreciation. The delivery equipment has a zero residual value.The government also agreed to provide an interest-free loan of £400,000, with the loan payable at the end of two years. ABC Co.’s incremental borrowing rate is .

Instructions

4. On July 2, 20X1, ABC Company sold to DEF merchandise having a sales price of €8,000 (cost €3,200) with terms of 2/10. n/30. f.o.(B) shipping point. ABC estimates that merchandise with a sales value of €800 will be returned. An invoice totaling €80, terms n/30, was received by DEF on July 6 from PQR Delivery Service for the freight cost. Upon receipt of the goods, on July 3, DEF notified ABC that €300 of merchandise contained flaws. The same day, ABC issued a credit memo covering the defective merchandise and asked that it be returned at ABC’s expense. ABC estimates the returned items to have a fair value of €60. The freight on the returned merchandise was €30 paid by ABC on July 7. On July 12, the company received a check for the balance due from DEF.InstructionsPrepare journal entries for ABC Company to record all the events noted above assuming sales and receivables are entered at gross selling price.

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