1. The following costs were incurred by Yusif Bangana Ltd in 2020 in the design and construction of a new office building over a nine-month period during 2020: GH000

Feasibility study	16
Architects' fees	200
Site clearance (by external demolition professionals)	160
Construction materials Cost of own inventories used in the construction	1,200
(net realisable value if sold outside the company GH48,000)	60
Internal construction staff salaries during period of construction	720
External contractor costs Income from renting out part of site as storage depot	4,800
during early phase of construction	(24)

7,132 Required:

In accordance with IAS 16 Property, plant and equipment, calculate the amount that Yusif Bangana Ltd should capitalize as property in the financial statements for the year ending 31

December 2020. 3 marks

2. Abdul Mumin Inc. owns the following properties as at 31 December 2020:

Property: Fair value (GHmillion)

Land with future use undetermined 6.4

Factory rented to Abdul Mumin's subsidiary under an operating lease 4.8

10 floor office building (fair value is equal per floor)

with 3 floors used as the subsidiary's head office and seven floors

rented to third parties under an operating lease. 30.0

Empty building held for capital appreciation, but not leased out. 8.2

Abdul Mumin's accounting policy is to hold its investment properties under the fair value model and its land and buildings under the revaluation model.

Required:

In accordance with IAS 40 Investment Property calculate the carrying amount to be recognised as investment property in Abdul Mumin's consolidated financial statements as at 31 December 2019.

3 marks

3. IAS 23 Borrowing Costs requires that borrowing costs directly attributable to the acquisition, construction or production of a 'qualifying asset' (one that necessarily takes a substantial period of time to get ready for its intended use or sale) are to be capitalised or included in the cost of the asset once they meet certain conditions.

Required:

Identify THREE conditions that must be met before an entity can commence to capitalise

borrowing cost. 3 marks

4. Shefa Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Shefa is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH45,000. It was revalued to GH54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH32,000.

Required:

Discuss the accounting treatment required in 2018 and 2019 financial statements. 3 marks

5. E. Franca Enterprises Ltd bought a machine for GH 150,000 on 1^st January 2019. It depreciates the machine on cost over four years assuming a nil residual value.

The company received a grant of GH30,000 from the municipal assembly to support the acquisition of the machines.

Account for this grant under the netting off method.