Question

Repayment of grant related to an asset shall be recorded by:

1) Increasing the carrying amount of asset if the deduction approach is used
2) Recognizing as expense the cumulative additional depreciation that would have been recorded to date in the absence of the grant if the deduction approach is used
3) Reducing the deferred income balance to zero if the deferred income approach is used
4) All of these

Answer 1

Repayment of a grant related to an asset can be recorded in different ways depending on the approach used, including increasing the carrying amount of the asset, recognizing additional cumulative depreciation as an expense, and reducing the deferred income balance to zero.

Step-by-step explanation:

If a grant is related to an asset, the repayment of the grant can be recorded in a few different ways depending on the approach used.
If the deduction approach is used, the repayment of the grant would be recorded by:
1) Increasing the carrying amount of the asset. This means that the asset's value would be adjusted to account for the repayment of the grant.
2) Recognizing as an expense the cumulative additional depreciation that would have been recorded to date in the absence of the grant. This means that the additional depreciation that would have been charged against the asset if the grant was not received would now be recognized as an expense to offset the increase in carrying amount.
If the deferred income approach is used, the repayment of the grant would be recorded by:
3) Reducing the deferred income balance to zero. This means that the liability for the grant (deferred income) would be reduced until it reaches zero.
So, the correct answer is 4) All of these. The recording of the repayment of the grant can involve any or all of the options mentioned, depending on the approach used.