1.Cranston LTD. prepares its financial statements according to International Financial Reporting Standards. In October 2013, the company received a $2 million government grant. The grant represents 20% of the total cost of equipment that will be used to improve the roads in the local area. Cranston recorded the grant and the purchase of the equipment as follows:
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Required:
1. Explain the alternative accounting treatments available to Cranston for accounting for this government grant.
2. Prepare any necessary correcting entries under each of the alternatives described in requirement1.