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Verge was given a building by a private individual in February 2012. The benefactor included a condition that it must be brought into use as a train museum in the interests of the local community or the asset (or a sum equivalent to the fair value of the asset) must be returned. The fair value of the asset was $1.5 million in February 2012. Verge took possession of the building in May 2012. However, it could not utilize the building in accordance with the condition until February 2013 as the building needed some refurbishment and adaptation and in order to fulfill the condition. Verge spent $1 million on refurbishment and adaptation. On 1 July 2012, Verge obtained a cash grant of $250,000 from the government. Part of the grant related to the creation of 20 jobs at the train museum by providing a subsidy of $5,000 per job created. The remainder of the grant related to capital expenditure on the project. On 31 March 2013, all the new jobs had been created.

 

Advise how Verge should deal with the above issues in its financial statements for the year ending 31/3/12 and 31/12/13.

Requirements:

Advise how Verge should deal with the above issues in its financial statements for the year ending 31/3/12 and 31/12/13.

Marks: 7

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Created by Ref Marking Action
Kawsar Ahmed's picture
Kawsar Ahmed
03/06/2021 - 09:00

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