FA Ltd. is a company which manufactures aircraft parts and engines and sells them to large multinational companies like Boeing and Airbus…

FA Ltd. is a company which manufactures aircraft parts and engines and sells them to large multinational companies like Boeing and Airbus Industries. Following are the details of some of the transactions entered into by the company: i. On 1st April 20X2, the company began the construction of a new production line in its aircraft parts manufacturing shed. Costs relating to the production line are as follows: Details Amount in lakhs Costs of the basic materials (list price - 12.5 lakhs less 20% trade discount) 10.00 Recoverable goods and services tax incurred but not included in the purchase cost 1.00 Employment costs of the construction staff for three months till 30th June, 20X2 1.20 Other overheads directly related to the construction 0.90 Payments to external advisors relating to the construction 0.50 Expected dismantling and restoration costs 2.00 The production line took two months to make ready for use and was brought into use on 31st May, 20X2. The other overheads were incurred during the two-month period ended on 31st May, 20X2. They included an abnormal cost of 0.3 lakhs caused by a major electrical fault. The production line is expected to have a useful economic life of eight years. After 8 years, FA Ltd. is legally required to dismantle the plant in a specified manner and restore its location to an acceptable standard. The amount of 2 lakhs included in the cost estimates is the amount that is expected to be incurred at the end of the useful life of the production line. The appropriate discount rate is 5%. The present value of 1payable in 8 years at a discount rate of 5% is approximately 0.68. Four years after being brought into use, the production line will require a major overhaul to ensure that it generates economic benefits for the second half of its useful life. The estimated cost of the overhaul, at current prices, is 3 lakhs. No impairment of the plant had occurred by 31st March 20X3. ii. During the year ended 31st March 20X3, FA Ltd. provided consultancy services to a customer regarding the installation of a new production system related to aircraft parts. The system has caused the customer considerable problems, so the customer has taken legal action against the Company for the loss of profits that has arisen as a result of the problems with the system. The customer has claimed damages to the tune of 1.6 lakhs. The legal department of FA Ltd. considers that there is a 25% chance the claim can be successfully defended. The legal department further stated that they are reasonably confident the Company is covered by insurance against these types of loss. The accountant feels nothing needs to be provided for this claim as the Company is suitably covered against any possible losses. iii. FA Ltd. has an associate company, Flynet Limited. Following are the information of Flynet Limited for the year ended 31st March 20X3: Particulars ₹ in lakhs Net Income after taxes 120 Decrease in accounts receivables 20 Depreciation 25 Increase in inventory 10 Increase in accounts payable 7 Decrease in wages payable 5 Tax charge for the year (deferred tax liabilities) 15 Profit from sale of land 2 On the basis of the facts given above, chose the most appropriate answer to Questions 6 to 10 below based on the relevant Indian Accounting Standards (Ind AS).