Use the Following Information for Questions

question 19

Multiple Choice

Use the following information for questions.
Lee Company received an HK$1,800,000 subsidy from the government to purchase manufacturing equipment on January, 2, 2011.The equipment has a cost of HK$3,000,000, a useful life a six years, and no salvage value.Lee depreciates the equipment on a straight-line basis.
-Whether Lee chooses to account for the grant as deferred revenue or as an adjustment to the asset, the combined impact of deferred grant revenue recognition and\ or depreciation expense recorded per year will be:

• A)decrease to net income of HK$200,000.
• B)decrease to net income of HK$300,000.
• C)increase to net income of HK$500,000.
• D)increase to net income of HK$100,000.

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Definitions:

Random Variable

A variable whose numerical values result from a random phenomenon or statistical experiment.

Constant

In mathematics and statistics, a fixed value that does not change within the scope of a given problem.

Interval

A range between two numbers or points, often used to specify a period of time or a statistical range.

Standard Normal Distribution

A specific probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.