Alterator Ltd, which operated a lithium mine, was purchased by Faraonio Ltd for \($80\) 000 000 (residual value \($5\) 000 000). It is estimated that the mine will produce 20 million tonnes of lithium. Mining equipment with a useful life of 12 years was installed at a cost of \($5\) 000 000. Extraction of lithium will exhaust the mine in about 10 years, after which time the equipment will be abandoned.

Required

(a) Prepare entries for Faraonio Ltd to record amortisation of the mine and depreciation of the mining equipment for the first year, assuming that 2 000 000 tonnes of lithium was mined and sold.

(b) Prepare a partial statement of financial position for Faraonio Ltd showing how the mine and the mining equipment would be reported at the end of the first year of operations.