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The following information relates to the financial statements of B Co for the year to 31 March 2015 . The mining division of B Co
The following information relates to the financial statements of B Co for the year to 31 March 2015 . The mining division of B Co has a 3 year operating licence from an overseas government. This allows it to mine and extract copper from a particular site. When the licence began on 1 April 2014, B Co started to build on the site. The cost of the construction was Rs. 500,000 . The overseas country has no particular environmental decommissioning laws. In its past financial statements B Co has given information about the company's environmental policy and has provided examples to demonstrate that it is a responsible company that believes in restoring mining sites at the end of the extraction period. The cost of removing the construction at the end of the three years is estimated to be Rs. 100,000 . The cost of the site currently shown in the trial balance is Rs. 500,000 . The company has a cost of borrowing of 10%. Required Explain the correct accounting treatment for the above (with calculations if appropriate)
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