QUESTION $1(45$ marks$)$ Repsola is a drilling company that operates an offshore Oilfield in Feeland. Five years ago, Feeland had a major oil discovery and granted licenses to drill oil to reputable, experienced drilling companies. The licensing agreement requires the company to remove the oil rig at the end of production and restore the seabed. Ninety percent of the eventual costs of undertaking the work relate to the removal of the oil rig and restoration of damage caused by building it and ten percent arise through the extraction of the oil. At the Statement of Financial Position $($SOFP$)$ date $($December $312025),$ the rig has been constructed but no oil has been extracted On January $\backslash (1^\{\backslash$text $\{$st $\}\}\backslash )2023,$ Repsola obtained the license to construct an oil rig at a cost of $\backslash (\backslash$$ $500\backslash )$ million. Two years later the oil rig was completed. The rig is expected to be removed in $20$ years from the date of acquisition. The estimated eventual cost is $100$ million. The company's cost of capital is $\backslash (10\backslash \%\backslash )$ and its year end is December $\backslash (31^\{\backslash$text $\{$st$.\}\}\backslash ).$ Repsola uses straight line depreciation for its non$-$current assets. Requirements: a$)$ Explain if a provision should be made at the current SOFP date for: $($i$)$ the removal of the rig and restoration of the seabed $(11$ marks$)($ii$)$ restoration cost for extraction of the oil $(9$ marks$)$ b$)$ Prepare the necessary journal entries for the years ended December $2023,2024\backslash$& $2025.$ Show all workings. $(25$ marks$)$ QUESTION $2(14$ marks$)($a$)$ A property lease includes a requirement that the premises are to be repainted every five years and the future cost is estimated at $\backslash (\backslash$$ $100,000\backslash ).$ The lessee prefers to spread the cost over the five years by charging $\backslash (\backslash$$ $\backslash$$ $20,000\backslash )$ against profits each year. Thereby creating a provision of $\backslash (\backslash$$ $100,000\backslash )$ in five years' time and affecting profits equally each year. Requirement: Was it correct for the lessee to provide for this cost? Explain your decision $(5$ marks$)($b$)$ A retail store has a policy of refunding purchases by dissatisfied customers, even though it is under no legal obligation. Its policy of making refunds is generally known. Requirements: Should a provision be made at year end $(9$ marks$)$