Wind Town Is a Builder of Wind Turbines That Are

question 79

Essay

Wind Town is a builder of wind turbines that are used in electricity generation. To encourage the installation of wind turbines and the development of wind power technology, the provincial government has several programs in place that support the industry. In 2021, Wind Town incurred the following costs that were potentially eligible for government subsidies:
i.The company spent $10 million on research and development (R&D); these costs are eligible for a 25% tax credit. The $10 million had been previously expensed.
ii.For each megawatt of wind power generating capacity installed, the government provides a subsidy of $100,000 to the customer. In 2021, Wind Town installed 17 megawatts for its customers (utility companies).
iii.Wind Town is eligible for a full tax rebate on sales tax normally levied on materials used in the construction of its turbine factory. This sales tax amounted to 5% of the materials cost of $35 million.
Required:
a. Record the journal entries for the above transactions using the gross method for government grants.
b. Record the journal entries for the above transactions using the net method for government grants.

Analyze the impact of technological advances on market outcomes.

Comprehend the law of supply and the law of demand.

Identify the consequences of changes in factors other than the good's own price on supply and demand.

Understand how changes in the price of complementary and substitute goods affect demand.

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Definitions:

Product Benefits

The positive outcomes or advantages that a product offers to its users.

User Experiences

The overall emotional, physical, and psychological interaction a person has with a product, service, or system.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of investment.

Less Attractive Features

Characteristics or aspects of a product, service, or proposal that may be seen as disadvantages or not appealing.