Module 7 - Grants

Question 1

Grants related to staff training etc., are an example of…

Answer 1

Income grants

Question 2

Income grants costs already inccured are logged as…

Answer 2

Dr. Cash and cash equivalents

       Cr.            P/L staff costs

ALREADY PARTLY INCURRED***

Question 3

Income grants where costs have NOT yet been incurred are logged as…

Answer 3

Dr. Cash and cash equiv.

   Cr.          Deferred income

NOT YET incurred
Not yet CD
I.e. obligation will be to spend this income, so liability has gone up ^^^

Then released to P/L

Question 4

Grants in two types…

Answer 4

Monetary and non monetary

Question 5

Monetary grants are…

Answer 5

Money used for training, to buy assets etc.

Question 6

Non-monetary grants are…

Answer 6

When granted the asset directly

Question 7

Deferred income released is written as…

Answer 7

Dr. Deferred income

     Cr.         P/L

Question 8

5,000 cash to buy 20,000 oven.

10 years no residual value

Logged as method 1:

Answer 8

1.

Dr. Cash and cash equiv. 5000

   Cr.          P/L Equip Costs.     5000

Dr. Equipment Cost. 20,000

   Cr.         Cash cash equiv.       20,000

3.

Dr. P/L Dep Charge 1,500

   Cr.        Equip. Acc Dep.     1,500

Question 9

Release of deferred income…

Answer 9

Dr. Deferred income

   Cr.     P/L income

(Costs incurred / Conditional costs) x Grant Recieved

^^^^^ eg. 60% of the costs incurred to conditional costs means that 60% of grant recieved must be released

Question 10

Depreciation charge if recognised ‘in other income on P/L statement’…

Answer 10

Purchase amount X ( 1 / number of life years)

Question 11

Depreciation charge if ‘net amounts against relevant expenses’…

Answer 11

(Purchase - granted amount) x (1 / useful life)