Anthony Limited wanted to start manufacturing guns and weapons. To do this they were required to

Anthony Limited wanted to start manufacturing guns and weapons. To do this they were required to obtain a license from the government. The company applied for a license and was awarded one on the 30 June 20X8. The fair value of the grant is reliably determined to be worth C 900 000, and has to be renewed for this amount in 5 years’ time. The company had to pay the government C 50 000 to obtain the license.

The company was also given free technical advice by government experts on the manufacturing of weapons as well as on the marketing thereof. This assistance was given because of the company’s excellent BEE rating (a government imposed set of criteria that companies in that country should abide by) in its other operations.

The company has a 31 December financial year end.

Required

a) Show the journal entries for the year ended 31 December 20X8 assuming that Anthony Limited measures the license at its fair value.

b) Show the journal entries for the year ended 31 December 20X8 assuming that Anthony Limited measures the license at its nominal amount.

c) Prepare the disclosure necessary for the government assistance not recognized in Anthony Limited’s accounting records.

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