At the beginning of current year, XYZ Company purchased a plating machine for P4,900,000

Accounting Nov 10, 2021

At the beginning of current year, XYZ Company purchased a plating machine for P4,900,000. The entity received a government grant of P600,000 toward this capital cost. The machine is to be depreciated on a 20% reducing balance basis over 10 years. The estimated residual value is P210,000. Prepare the journal entries for the current year, assuming the grant is accounted for as deferred income and deduction from asset.