QUESTION $2$

Kingston Processors Limited $($KPL$)$ constructed a solar plant on January $1,2020.$ The solar plant is estimated to have a useful life of $30$ years $($nil residual value$)$ from the date it was completed and ready to be used. The plant was operational on April $1,2020,$ but the entity actually commenced use of the plant on June $30,2020.$ The solar plant was self$-$constructed and KPL incurred the following costs:

direct material, $$600$ million

direct labour $$450$ million

overheads $$750$ million

Of the total overheads incurred, $30\%$ represents cost overruns due to inefficiencies by the project manager and $$10,000,000$ represents general administrative overheads. To support with appropriate usage of the solar plant, the entity incurred an additional $$60$ million to train all the operators to use the plant. The costs incurred in constructing the asset are expected to increase efficiencies and yield significant future economic benefits.

Required:

a$)$ Determine the depreciation charge for the period ended December $31,2020.(2$marks$)$

b$)$ Determine the carrying amount of the asset as at December $31,2021.(4$marks$)$

c$)$ Differentiate between capital and revenue expenditure giving an example of each from the scenario above $(5$ marks$)$