Asset grant file: presentation, release and effect on profit or loss: Deduction from the carrying amount

Context

Usinage Valmère SAS (fictitious entity) acquires and places in service on 1 January 20X5 a machine costing 500,000 EUR and receives on the same day an equipment grant of 100,000 EUR from a region. The entity has not yet fixed the presentation of the grant: it compares deferred income with deduction from the carrying amount.

Assignment

Asset grant file

Purpose of the workpaper

For each asset financed in part by a grant (one instance per asset or per presentation), enter the cost, the grant, the useful life and the gross depreciation of the IAS 16 baseline, then compute the annual release (deferred income), the net cost and the reduced depreciation (deduction) and compare the net effect on profit or loss. An asset received as a grant is handled separately (fair value and consideration paid). Justify the presentation chosen: the choice is open to the entity and no amount imposes it.

Questions of the file covered by this workpaper

• Compute the annual release of deferred income.
• Compute the cost of the machine net of the grant.
• Compute the annual depreciation on the net cost.
• Compute the difference in net effect on profit or loss between the two presentations.
• Record the grant and the depreciation with deferred income.
• Record the grant and the depreciation with the deduction.

• ContractGrant agreementOpen
• ScheduleAsset registerOpen
• MemoMaintenance contractOpen