Use the following information for the next  questions: On January 1, 20x1, MACABRE HORRIBLE Co

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Use the following information for the next  questions:

On January 1, 20x1, MACABRE HORRIBLE Co. received cash of ?16,000,000 from a local government to be used to defray safety and other hazard-related costs over a five-year period. It was estimated that such costs will total ?32,000,000 over the next five years. In 20x1 and 20x2, actual costs of safety and other hazard-related costs amounted to ?4,000,000 and ?4,800,000, respectively.

 

1. If MACABRE Co. uses the gross presentation of government grants, how much safety expense is recognized in 20x1?

a. 4,000,000 b. 2,400,000 c. 2,000,000 d. 0

2. If MACABRE Co. uses the net presentation of government grants, how much is safety expense is recognized in 20x1?

a. 4,000,000 b. 2,400,000 c. 2,000,000 d. 0