Blue Crane Ltd is a large manufacturing company with a $31$ December year$-$end. The

company consists of various divisions that each manufacture a specific product.

One of the company$$s divisions specialises in the manufacturing of various types of

potato chips and Blue Crane Ltd has a very special recipe that they use in the

manufacture of their potato chips. Due to this special recipe, there is a very high

demand for Blue Crane Ltd$$s potato chips.

The board of directors decided that they needed to expand their potato chip

manufacturing division to keep up with the high demand for these particular products.

For this expansion, the construction of a brand$-$new manufacturing plant was approved

by the board of directors. At the latest board meeting, the management accountant

prepared a presentation showing the costs incurred during the construction of the

manufacturing plant between $1$ January $2024$ to $31$ July $2024.$

The following costs were incurred to construct the manufacturing plant:

Note Rand

Raw materials $15000000$

Labour costs $1000000$

Provision for dismantling costs $2?$

Machine $3?$

Supportive base $4250000$

Note $1$ Raw materials

The raw material purchases are made up of R$3500000$ purchased from external

suppliers and R$1500000$ of raw materials transferred from one of Blue Crane Ltd$$s

other manufacturing The R$1500000$ includes an inter$-$divisional markup of

$15\%$ on the cost. Note $2$ Provision for dismantling costs

The manufacturing plant structure is estimated to have a useful life of $20$ years and no

residual value. At the end of its $20-$year useful life, the structure will be dismantled and

a provision for this cost must be recognised. The expected future dismantling costs

after $20$ years amounts to R$1300000.$ The market$-$related interest rate applicable for

similar transactions is considered to be $6\%$ per annum. Additional information:

$$ The manufacturing plant, including all components thereof, and the machine, including all components thereof, was available for use and began operating on $1$

August $2024.$

$$ Depreciation on all components is calculated using the straight$-$line basis. Prepare extracts from the statement of financial position as at $31$ December

$2024$ for Blue Crane Ltd showing all the balances relating to the

manufacturing plant structure, refer to notes $1$ and $2.$

Comparative figures are not required and notes to the financial statements are not

required.

$(20$ marks$)$