The question is attached.

International accouting / ifrs

Part C Valley Company started construction of specialized equipment for a customer on January 1, 2016. Estimated costs for the production of these equipment amount to AED 20 million dirhams over 2 years. The contract price is AED 30 million. The customer pays AED 5 million on the date of signing the contract and the remaining amount to be paid at the date of delivery. On October 1, 2016. The Company borrowed AED 10 million for 3 years at 8% annual interest rate to partially finance the cost of constructing the equipment. The interest is to be paid on January 1 of each year and the principle amount will be paid at the end of the third year. The construction process was completed on September 30 of 2017. The following manufacturing costs were incurred during production Cost of direct material used 2016 AED 7 million Cost of direct labor AED 4 million Cost of other manufacturing overhead AED 2 million Total AED 13 million 2017 Total AED 3 million AED 2 million AED 2 million AED 7 million AED 10 million AED 6 million AED 4 million AED 20 million The Company delivered the constructed equipment on October 1, 2017 and received the remaining amount of the sale contract. Required: 1 Analyze the above case and determine the proper cost of the equipment sold as of October 1, 2017 (2 marks). 2 Construct the necessary journal entries to recognize the above transactions and events on the books of Valley Company for 2016 and 2017