When an Asset Acquired Through a Government Grant Is Recorded

question 27

True/False

When an asset acquired through a government grant is recorded on the books, equity will increase by the cost of the asset.

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Definitions:

ABC Stock

A hypothetical or generic naming for a stock used in examples; not a specific financial term.

Positive Earnings

When a company’s income, excluding losses and expenses, is more than zero indicating profitability.

Convertible Bonds

Convertible bonds are types of bonds that can be converted into a predetermined number of shares of the issuing company's stock at certain times during the bonds' life, usually at the discretion of the bondholder.

Warrants

Securities that provide the holder the right to purchase the company's stock at a specified price before the expiry date.