26. ABS Ltd. Sells goods with a warranty under which customers are covered for the cost of repairs of any manufacturing defect that becomes apparent within the first 6 months of purchase. The company's past experience and the future expectations indicate the following pattern of likely repairs: Required: What is the provision required"? 27. In which of the following circumstances will a provision be recognised? i. On 13 December 2009, the board of ABS Ltd decided to close down a division. The accounting date of the company is 31 December. Before 31 December 2009, the decision was not communicated to any of those affected and no other steps were taken to implement the decision. ii. The board agreed a detailed closure plan on 20 December 2009 and details were given to customers and employees. iii. A company is obliged to incur clean-up costs for environmental damage that has already been caused. iv. A company intends to carry out future expenditure to operate in a particular way in the future. 28. During 2010, ABS Ltd gives a guarantee of certain borrowings to ASMAS Ltd, whose financial condition at that time was sound. During 2011, the financial condition of ASMAS Ltd deteriorates and at 30 June 2011, ASMAS Ltd files for protection from its creditors. Required: What accounting treatment is required? i. At 31 December 2010? ii. At 31 December 2011? 29. Otwinoko has just been appointed as the Finance Director of SRC LAd. On 1 January 2016, SRC L.d acquired a manufacturing plant with a list price of GHS 500,000 . The following further costs were incurred: The installation and setting up period took 3 months and a further amount of GHS42,000 was spent on costs directly related to bringing the asset to its working condition. The plant was ready for use of 1 April 2016. 6 Monthly managerial reports indicated that for the first 5 months to August 2016, the production units from this plant resulted in initial operating lesses of GHS30,000 because of the small quantities produced. The months thereafter show much more positive results. The plant has an estimated useful life of 10years and estimated residual value of GHS36,000. Estimated dismantling costs amount to GHS24,000. Required: What is the cost of the asset to be initially recognised in the asset register and what amount should be charged in the income statement relating to the consumption of the economic benefits embodied in the asset for the 2016 financial year? 30. TUCC Ld is installing a new ICT facility (including a data centre) to enable it better manage its student database and information system. The Finance Director has enumerated there as the costs incured so far. Cost of the software and building (per the suppliers invoice and taxes) 31. XYZ Company revalues its buildings and decides to incorporate the evaluation into the financial statements. The following information is relevant: a) Extract from the balance sheet at 31 December 2006 B) Depreciation has been provided at 2% per annum on a straight line. c) The building is revalued at 30 June 2007 at GHC27,600,000. There is no change in the remaining estimated futare life. Required Show the relevant extracts from the financial statements at 31 December 2007