QUESTION 2 arisen and the board is to meet soon to determine ana MegaBux Co is a multinational holding company. During the year a number of situations have appropriate treatment. Site A This site is occupied by a small refinery. The site and some adjacent land has been contaminated by chemical spillages. The cost of remedying the contamination is GHe 20m, but under local laws there is no requirement to clean up the site. Site B Similar contamination has arisen but the local government, and a neighbouring land owner, but an extra GH5m could be spent to raise the standard of the operation in line with require the contamination to be remedied soon. The cost of cleaning up the site is GHe 15m, undertakings given to the local community ten years ago. Site C Considerable contamination needs to be remedied, but the managing director is arguing that no provision is required this year since the amount concerned cannot be estimated with accuracy. Site D Spillage of chemicals has reduced the value of the site from GH 25m, its book value, to GH 10m, its current realisable value. By spending GH 5m on rectification, the site value will be increased to GH 20m. The spillage has seeped into a local river and fines of GH3m are now payable. Required: Determine the appropriate treatment for each of the situations above. (8marks) QUESTION 2 arisen and the board is to meet soon to determine ana MegaBux Co is a multinational holding company. During the year a number of situations have appropriate treatment. Site A This site is occupied by a small refinery. The site and some adjacent land has been contaminated by chemical spillages. The cost of remedying the contamination is GHe 20m, but under local laws there is no requirement to clean up the site. Site B Similar contamination has arisen but the local government, and a neighbouring land owner, but an extra GH5m could be spent to raise the standard of the operation in line with require the contamination to be remedied soon. The cost of cleaning up the site is GHe 15m, undertakings given to the local community ten years ago. Site C Considerable contamination needs to be remedied, but the managing director is arguing that no provision is required this year since the amount concerned cannot be estimated with accuracy. Site D Spillage of chemicals has reduced the value of the site from GH 25m, its book value, to GH 10m, its current realisable value. By spending GH 5m on rectification, the site value will be increased to GH 20m. The spillage has seeped into a local river and fines of GH3m are now payable. Required: Determine the appropriate treatment for each of the situations above. (8marks)
