Question $1$

On $1$ April $2021,$ Sedem Ltd completed the construction of an energy generating facility and brought the facility into use immediately. The cost of construction of the facility was included in property, plant and equipment and was also appropriately depreciated over the useful life of the facility, which was estimated at $16$ years at $1$ April $2016.$

At the end of the useful life of the facility, Sedem Ltd has an obligation to decommission the facility and restore its location to its former condition. The estimated cost of this decommissioning and restoration is GH$8,000,000,$ payable on $31$ March $2032.$ The directors of Sedem Ltd made a provision of GH$8,000,000$ in respect of this liability, and charged GH$8,000,000$ to administrative expenses in the year ended $31$ March $2017.$ An appropriate discount rate to use in any discounting calculations is $8\%$ per annum. At $1$ April $2016,$ the present value of GH$1$ payable in $16$ years$$ time at $8\%$ can be taken as $30$ pesewas.

Required:

i$)$

Explain how an obligation to decommission should be accounted for.

ii$)$

Prepare extracts from the financial statements of Sedem Ltd for the year to $31$ March $2022$ to reflect the necessary corrections