1. Use of Estimates in Financial Reporting [recommended time: 54 minutes] a) Provisions Dish plc has a year end of 31 December 2021. It was given 5% permission on 1 January 2021 to mine for minerals it uses as Discount raw materials, for a period of 5 years. Decommissioning costs Year: Factor: at the end of the five years will be 7 million. Of this, 20% 1 0.952 relates to the removal of plant and equipment required to carry 2 0.907 out the mining, and the remainder is to rectify damage caused 3 0.864 by mining. The plant and equipment was specifically 4 0.823 constructed for the project, at a cost of 20 million. Due to delays, extraction had not started at 31 December 2021, 5 0.784 although the plant and machinery had been set up on site. The licensing agreement was granted to Dish on condition that the plant be removed at the end of operations. Dish uses a risk-adjusted discount rate of 5% to account for the effect of the time value of money (see table, right). Required: Explain how the decommissioning costs (both removal of plant and damage rectification) should be accounted for and disclosed in the financial statements of Dish for the year ended 31 December 2021. (20 marks)