Part A (4 marks) For each of the following items , indicate whether these expenditures incurred subsequent to acquisition, should be capitalised or expensed in the period when it as incurred by placing an X in the appropriate cell in the table below.

	Capitalised	Expensed
$7,000 paid to replace a wooden floor with a concrete floor.
$700,000 paid for relocating company headquarters
$6,000 to replace 18 tires on a trailer
$200,000 paid for an addition to a building

Part B. (3 marks) Manufacturing Incorporated (MI) purchased land on January 1, 2020, which it started to operate as a gravel pit. The gravel pit will be operating for the next 5 years. At the end of the 5 years, MI will be required to incur an estimated cost of $5 million to restore the land. This is required by government legislation. The interest rate that reflects the risks to MI is 8%.

Required:

1. At what amount should the asset restoration cost liability be recorded on January 1, 2020? (2 marks).

________________________________________

2. What is the interest expense associated with the liability for the year 2020? (1 mark)

_________________________________