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Dear sir,
Could you explain the treatment on recognizing decommissioning costs as a provision?Thanks!
Dr TNCA (typically a power station in the exam) with the present value of the future costs of dismantling the power station
Cr Provision
Each year, the present value is recalculated taking into account revised estimates of future costs and current costs of capital and the provision is increased accordingly
The double entry to record that annual adjustment is:
Dr Finance costs
Cr ProvisionOK?
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