Consider the following:

1 Under new legislation, a retail business will be obliged to fit handrails to the staircases used in its stores. The law will come into force six months after the end of its current reporting period. So far the business has done nothing to respond to this change in the law. The cost of fitting the handrails is expected to be £2 million.

2 The board of directors of a manufacturing business has decided to close down its motor cycle division. The board has charged the chief executive with the task of drawing up a formal detailed plan for the closure. The costs of closure have been estimated as

£4.5 million.

3 An energy business operates a nuclear power station. In fifty years’ time, the power station will be decommissioned and the law requires the business to incur the costs of decommissioning. Decommissioning costs of £80 million are expected.

4 New health and safety rules have been introduced by the government, which apply to manufacturing businesses. A large manufacturer will need to retrain its managers to ensure compliance with the new rules. The cost of the retraining programme is estimated at £1 million. At the end of the reporting period, no retraining has taken place.
5 An energy business operates an oilfield in the North Sea. The licensing agreement with the UK government requires the business to remove the oil rig when oil production ceases and to restore the sea bed. It is estimated that 80 per cent of the restoration cost will arise from removal of the oil rig and 20 per cent from damage created from oil extraction. Total restoration costs are estimated to be £10 million. To date, the oil rig has not commenced operations and so no oil has been extracted.
For which of the above should a provision be recognised? Give your reasons.