Maga erected a number of buildings at a cost of $2 000 000 which was settled on 1 January 2014 in cash. These buildings have a useful life of 10 years and were completed and put into use on 1 January 2018. Maga Limited received a government grant of $200 000 on January 1 2018, since the government regards it as a priority to provide houses to all citizens. Assume a profit after tax to the above transactions of $1 000 000.
(a) Prepare the journal entries for the year ended 31 December 2018 in respect of the above transaction if it is assumed that the government grant is reflected in the Statement of Financial Position as deferred income.