MNH has received an approval from the government to construct a manufacturing plant. Part of the condition for the approval is that MNH would need to dismantle the plant and restored it back to the original condition when the project cease in 6 years time. The construction cost of the plant is estimated to be $50 million. However due to a wrong specification from the architect, the company ended up incurring a total construction costs of $50.5 million. Meanwhile the estimated cost of restoration cost in 5 years time would be $10.2 million. Besides therestoration costs the company also estimated that they will incur another $20 million environmental cost as a result of the damages done on the environment from their manufacturing activities.

Required:

a) Determine the cost of the manufacturing plant capitalized assuming that a discount rate of 10% apply (10% discount rate for year 5 is 0.621).

b) Show the financial statement extract for the first year.