a. Describing elements of cost of property, plant and equipment (PPE) Under IAS 16, costs related to property, plant and equipment (PPE) are capitalized under specific circumstances. Here is a concise description of each cost element associated with PPE and the conditions under which these costs are capitalized: i. Purchase price: The purchase price of an asset, including any import duties and non-refundable purchase taxes, is capitalized as part of the cost of PPE. ii. Directly attributable costs: These are costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Directly attributable costs include expenses such as site preparation, initial delivery and handling cost and installation cost. iii. Borrowing costs: If a company borrows funds specifically to finance the construction or acquisition of an asset, the interest incurred during the construction period can be capitalized. However, this is subject to certain criteria, such as the completion of substantial activities necessary to prepare the asset for its intended use. iv. Costs of dismantling and removing the asset: The cost of dismantling and removing the asset and restoring the site on which it is located is capitalized, if it is incurred as a consequence of acquiring or using the asset. This cost is recognized as part of the cost of the asset and is accounted for over the asset’s useful life. v. Subsequent costs: Costs incurred after the initial recognition of the asset can be capitalized if they result in increased future economic benefits and can be measured reliably. For example, costs related to significant upgrades or enhancements that extend the asset’s useful life or improve its performance can be added to the asset’s cost. It is important to note that costs are capitalized when they meet the recognition criteria, which include the probability that future economic benefits associated with the asset will flow to the entity and the cost of the asset can be measured reliably. If these criteria are not met, the costs are expensed in the period in which they are incurred. Proper adherence to these guidelines ensures accurate valuation and presentation of PPE in the financial statements, providing stakeholders with reliable information about the company’s long-term assets.

b. Caleb Limited The initial measurement of motor vehicle at cost:

Note: Annual insurance premium and fuel/maintenance expenses are not capitalized as they are operating expenses.

c. Igba Enterprises Cash account for the month of September 2023

Bal c/d carried down ₦1,112,000