Question No: 2 10 Marks Case (a) The National Ferries Company in Oman purchased a new ferry at a cost of OMR 320,000. The facilities available in that ferry were modern and long lasting. The useful life of the ferry was estimated for 20 years. At the end of the 8th year the ferrys wireless and navigation system requires replacement. The company felt that the maintenance cost of the wireless and navigation system was very high and they decided to replace that wireless and navigation system immediately. Except the wireless and navigation system, the ferrys technical parts and other facilities are sail worthy and are expected to function for the next 6 years without any problem. The National Ferries Company inquired about the price with the producer of wireless and navigation system and they are ready to deliver the wireless and navigation system at a price of OMR 85,000. Case (b) A land was acquired by a manufacturing corporation and the purpose of this acquisition was to construct a factory building. The corporation wishes to obtain permission from the government authorities. For this purpose, the corporation needs certificate from the government regarding environment clearance and change of classification of land etc. The estimated cost for such permission and clearance was OMR 42, 200. The corporation wishes to capitalize such cost of getting permission from the government and it should be included capitalized under cost of construction of factory building. According to the standards of IAS 16 the cost of an item of property, plant and equipment will be provided if and only if it is probable that asset must provide future economic benefits. And the cost of permission and clearance must also have to be measured reliably. Further as per the standards of IAS 16 the recognition of the cost of permission and clearance will be made at the time when it is incurred. As per the principle of recognition, the corporation has capitalized the cost of obtaining permission and clearance. Required: Case (a) i. On the role of a financial analyst provide your information about whether the cost of the new wireless and navigation system can be recognized as an asset? (2 Marks) ii. By considering the replacement cost of the wireless and navigation system, what amount would be reported as an asset? And How would treat this asset in the companys financial statements? (3 Marks) Case (b) i. On the role of a financial analyst justify by your explanation about the decision of capitalizing the cost of obtaining permission and clearance from the government is correct or not. (2 Marks) ii. If it is correct, how would you treat this cost in the cost in the corporations financial statements? 300 word (3 Marks)