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Assignment Task :
Question.1
Potato Limited is a company that farms corn. Potato Limited is a relatively new company in the corn industry having previously been in the gun manufacturing industry.
Potato Limited was awarded a government grant of 500 000 on 1 January 2015, the details of which are as follows:
• 300 000 is to assist with the purchase of a new harvester;
• 200 000 is for immediate financial support and is not associated with any future costs;
• All conditions attaching to the grant have been met. On the same day, the harvester was acquired for 900 000. The harvester has a useful life of 5 years and, at the end of its useful life, Potato Limited expects to sell it for 50 000 as scrap metal.
Required :
a) Show the journal entries for the year ended 31st December 2015 to 2019 using direct method (recognized as grant income)
b) Show the journal entries for the year ended 31st December 2015 to 2019 using indirect method (recognized as a reduction of related costs)
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