RFT is a manufacturer of kitchenware that is located in C-land where the currency is the C$. You are RFT's Finance Manager. As a matter of general policy, RFT's machines are replaced every six years and, at the end of the current financial year, several of the machines will be entering the sixth year of their useful lives. The cost of replacing the machinery during the next financial year will amount to C$12,906. Some initial enquires have already been made to potential suppliers of the machinery. Which describes how RFT should account in the current financial year for the cost of replacing the machinery in the next financial year? Solution A.No accounting entries are required in the current financial year. B.Disclose the intention to replace the machinery as a contingent liability in the notes to the current year financial statements. C.Recognise a provision for C$12,906 in the current year financial statements. D.Recognise a provision for C$2,151 in the current year financial statements, being one sixth of the known cost of replacing the machinery