QUESTION 2 The Conceptual Framework for Financial Reporting is a set of principles which underpin the...

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QUESTION 2 The Conceptual Framework for Financial Reporting is a set of principles which underpin the foundation of financial accounting. The Conceptual Framework sets out qualitative characteristics of financial statements. Required: Identify and explain the four enhancing qualities of financial statements. QUESTION 3 (10 marks) Nana Limited began the construction of its factory on 1" May, 2020. The following costs were incurred on the construction: Purchase price of land Architect fees Site preparation Cost of building materials used General overheads Operating losses before commercial production GH 5,500,000 310,000 1,350,000 340,000 7,800,000 500,000 Cost of introducing new products Cost of opening new facility Legal fees 11,200,000 40,000 2,400,000 Nana secured a loan of GH35,000 on 1st January, 2020 to finance the construction of the new factory. This meets the definition of a qualifying asset as per IAS 23. The loan carried an interest rate of 6% per annum. The factory was completed on 31st December, 2020 and brought into use following its grand opening on the 1st February, 2021. Required: ich Calculate the amount to be capitalized as borrowing cost. ii. Calculate the cost of the factory that will be included in tangible non-current assets at 31st December, 2020. (1 mark) (3 marks) 111. iv. Show the amount to be included in the statement of profit or loss as a finance cost. From the above information, identify the items which will not constitute the cost of (1 mark) factory according to IAS 16. (2 marks) V. Outline any three (3) criteria for capitalising borrowing cost. (3 marks) (10 marks) QUESTION 2 The Conceptual Framework for Financial Reporting is a set of principles which underpin the foundation of financial accounting. The Conceptual Framework sets out qualitative characteristics of financial statements. Required: Identify and explain the four enhancing qualities of financial statements. QUESTION 3 (10 marks) Nana Limited began the construction of its factory on 1" May, 2020. The following costs were incurred on the construction: Purchase price of land Architect fees Site preparation Cost of building materials used General overheads Operating losses before commercial production GH 5,500,000 310,000 1,350,000 340,000 7,800,000 500,000 Cost of introducing new products Cost of opening new facility Legal fees 11,200,000 40,000 2,400,000 Nana secured a loan of GH35,000 on 1st January, 2020 to finance the construction of the new factory. This meets the definition of a qualifying asset as per IAS 23. The loan carried an interest rate of 6% per annum. The factory was completed on 31st December, 2020 and brought into use following its grand opening on the 1st February, 2021. Required: ich Calculate the amount to be capitalized as borrowing cost. ii. Calculate the cost of the factory that will be included in tangible non-current assets at 31st December, 2020. (1 mark) (3 marks) 111. iv. Show the amount to be included in the statement of profit or loss as a finance cost. From the above information, identify the items which will not constitute the cost of (1 mark) factory according to IAS 16. (2 marks) V. Outline any three (3) criteria for capitalising borrowing cost. (3 marks) (10 marks)