Property and Equipment

Overall, I believe the Company is fully complying with the appropriate standards for its
financial statements. This reflection will narrate how the Metro Retail Stores Group, Inc.
has complied with the governing standards for Property, Plant, and Equipment – PAS 16.
Unfortunately, the Company has neither Wasting assets nor Intangible assets.

The Company initially recognizes and subsequently measures items of property, plant, and
equipment at cost and cost less accumulated depreciation, less accumulated amortization,
and less accumulated impairment in value, in any, respectively. This statement is per
paragraphs 15 and 30 of the Standard. The cost initially recognized in the account of
property and equipment comprises its purchase price, import duties, nontransferable
taxes, and directly attributable charges of bringing the property and equipment to its
functioning condition and placement for the purpose for which it was designed, including
borrowing cost. These lines follow paragraph 16 of PAS 16.

The Company adheres to paragraph 12 of the Standard. It recognizes that expenditures

incurred after the property and equipment is placed into operation are usually identified in
profit or loss in the period they are incurred. These expenditures include repairs and
maintenance costs. Paragraph 10 of PAS 16 has been followed by the Company as the cost
of an item of property and equipment includes costs incurred relating to leases of assets
that are used to construct an item of property and equipment, such as the depreciation of
right-of-use assets. In situations where it can be demonstrated that the expenditures
would increase future economic benefits expected to be obtained from using an item of
property and equipment beyond its initially assessed standard of performance, the
expenditures are capitalized as additional costs of such property and equipment.
Construction-in-progress is carried at cost (including borrowing cost) and transferred to
the related property and equipment account when the construction and associated
activities to prepare the property for its intended use are complete and the property is
ready for the use intended by the management. This statement complies with paragraph 22
of the Standards.

The straight-line method is used for depreciation and amortization, calculated over the
estimated useful lives (EUL) of the property and equipment, except for leasehold
improvements, which are amortized over the estimated useful life or the lease term of the
improvements, whichever is shorter. When a piece of property or equipment becomes
ready for use, i.e., when it is at the location and condition required to operate in the manner
planned by management, the Company begins depreciation and amortization.

When an item of property or equipment is derecognized if it is to be disposed of or when no

more future economic benefits can be derived from its use, this adheres to the paragraph
67 a and b of the Standard. When assets are sold or retired, the cost of the asset, as well as
any accumulated depreciation or accumulated amortization and accumulated impairment
in value, if any, are removed from the accounts. The profit or loss reflects any realized gain
or loss. The Company reflects paragraph 68 of PAS 16 as it includes any gain or loss on
asset derecognition in profit or loss in the year the asset is derecognized. The gain or loss is
calculated as the difference between the net disposal proceeds and the carrying value of the
asset. As stated in paragraph 55 of the Standards, depreciation ceases when the asset is
fully depreciated. With that being said, the Company has complied with the requirement of
the Standards as no further depreciation is credited or charged to fully depreciated
property and equipment while still in use and retained in the accounts. The useful lives and
methods of depreciation and amortization of the assets are reviewed and adjusted, if
appropriate, at each reporting date. This is following paragraph 61 of PAS 16.

As I have analyzed the Financial Statements of Metro Retail Stores Group, Inc., with the
application of my learnings, I believe that with what they have presented, they are indeed
adhering with the Standard applicable to the Property, Plant, and Equipment account,
which is the PAS 16.
Attached below is a copy of the reconciliation of the beginning and ending balances for the
period ended December 31, 2020, of the Property and Equipment account.