(i) Matters to consider

Generally 1 mark for each point made:

– Materiality of the mine to total assets
– Impairment review should have been performed
– Materiality of the potential write off to profit
– No impairment write off means overstated assets and profit
– Potentially all of the mine may be closed down and therefore impaired
– Equipment which cannot be recovered also needs to be written off
– Improvements to health and safety should be capitalised
– Costs of abandoning/sealing up collapsed tunnels should be expensed
– Separate presentation of material impairment costs in financial statements
– Provision to be recognised for damaged properties/relocation costs of local residents
– Further claims may be made leading to provisions or contingent liabilities
– The authority may impose fine/penalty – provision or contingent liability
– Going concern disclosure if accident creates significant doubt
– Break up basis if authority withdraw company’s operating licence

Maximum marks 14