Don't forget you have more entries to make, later.
If you Spend it, that is when you Relieve the Prepaid account to Income, and the Liability account to the actual Expense you just paid for.
And this only applies if that Grant is a reimbursement Grant. If that is Yours to keep it all, that is income when you get it. There is no Deferral, if you have full access to the resource it provides. And there is no Liability, unless you are an accrual basis entity and have committed funds.
A Town gets construction funds as they Expend the funds to pay for construction, so they have Income every time they get repaid. If they got the full amount in advance, that is Restricted Income until the Restricted purpose is met and the restriction is lifted (met) and not Deferred income as Asset.
Also, your username is "SCorp" so is this a Business or a Charitable Organization or a Governmental Entity? Because typical Businesses as S Corps get Income, not Grant as Deferred or Liability.