FAC 3703 ASSIGNMENT 1

1. 2 This is an asset based grant since the grant was provided in order to acquire non – current assets. 2. 5 R Government grant income (5 000 000 * 60% / 5) Change in accounting estimate (5 000 000 * 40% / 5 * 1 / 12) 600 000 (33 333) 566 667 3. 4 The government grant is recognized in profit or loss on a systematic basis over the useful life of the asset. Since this is an asset based grant, the grant will either be recognized as government grant income or just other income in the Statement of Profit or Loss and other Comprehensive Income. 4. 4 This is when the government grant will have been exhausted. Date Government grant received Expenses incurred Government Grant balance Comment 1 April - 5 000 000 15 April 000 000 Paid from fixed deposit 30 May 3 500 000 1 July 1 900 000 31 October 500 000 1 December - Deficit of 550 000 This study source was downloaded by from CourseH on :48:19 GMT -05:00 This study resource was shared via CourseH 5. 1 Form of Loan Amount Available Proportion Interest rate Calculation Weighted average interest rate Bank overdraft Loan from QWA Bank 200 000 500 000 28.57% 71.43% 20% 25% 28.57% * 20 71.43% * 25 5.714% 17.8575% Total % 23.5715% 6. 1 No tax allowance since the mobile food staffs were only brought into use 1 March 2017, which is the date on which the entity will commence providing the tax allowance. SARS does not capitalize borrowing costs and does not deduct the governm