QUESTION TWO a) Akakpo Ltd obtained a license free of charge from the government to dig and operate a gold mine. Akakpo Ltd spent GH6 million digging and preparing the mine for operation and erecting buildings on site. The mine commenced operations on 1 September 2014. The license requires that at the end of the mine's useful life of 20 years, the site must be eclaimed, all buiklings and equipment must be removed and the site landscaped. At 31 August 2015, Akakpo Lid estimated that the cost in 19 years' time of the removal and landscaping will be GH5 million and its present value is GH43 million. On 31 October 2015, there was a massive earthquake in the area and Akakpo Ltd's mine shaft was badly damaged. It is estimated that the mine will be closed for at least six months and will cost GH 1 million to repair. Required: 1) Demonstrate how Akakpo Ltd should record the cost of the site reclamation as at 31 August D1S in accordance with IAS 37 Provisions, Contingent Laabikties and Contingent Assets. (3 marks) ii) Explain how Akakpo Lid should treat the effects of the earthquake in its financial tatements for the year ended 31 August 2015 in accordance with IAS 10 Events after the Reporting Period (2 marks) Page 4 of 29 b) The following costs were incurred in 2016 in the design and construction of a new office huilding over a nine-month period during 2016: GH000 Feasibility study 8 Architects' fees 100) Site clearance (by external demolition professionals) 80 Construction materials 600) Cost of own inventories used in the construction (net realisable value if sold outside the company GH24.000) 30 Internal construction stall salaries during period of construktion 360 External contractor costs 2.400 Income from renting out part of site as storage depot during early phase of construction (1122 3.566 Required: In accordance with IAS 16 Property, plant and equipment, calculate the amount that should be capitalised as property in the financial statements for the year ending 31 December 2016. (4 marks)