Read the following business information of Peterlee Co:

Peterlee Co decided to re organize a manufacturing facility during November 2019 and commissioned a consulting engineer to carry out a feasibility study.

A provision for the reorganization was created at 31st December 2019.

 Staff functions will change following the reorganization, so in December 2019, Peterlee Co contracted with a new training company to provide retraining to take place in January 2020. A provision for this expenditure was created at 31st December 2019.

 Peterlee Co hopes that reorganizing its manufacturing facility will improve quality control. It gives a one-year warranty with all products and the rate of returns under warranty is 10%. 5% of the returned items can be repaired at a cost of £5 (free of charge to the customer). The other 95% are scrapped and a full refund of £30 is given. Peterlee Co sold 500,000 units during the year to 31st December 2019.

In 5 years, Peterlee Co will have to dismantle its factory and return the site to the local authority. A provision was set up for the present value of the dismantling costs when the factory was first acquired. The opening balance on the provision at 1st January 2019 was £2 million. X has a cost of capital of 8%.

13. What is the amount of the provision that should be created at 31st December 2019 for returns under warranty?

A. £1,438,500

B. £1,437,500

C. £1,436,500

D. £1,437,000

14. What is the amount of the provision that should be carried forward at 31st December 2019 for the dismantling of the factory?

A. £2,140,000

B. £2,160,000

C. £2,150,000

D. £2,170,000

15. With regard to intangible assets, which one of the following is NOT required by IAS38 Intangible Assets in relation to the amortisation of intangible assets?