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Good Evening Sir!!
Under the environmental costs heading in my kaplan text it says
if the expenditure results in future economic benefits, then an equivalent asset shd be booked.
this is a bit confusing – a provision which is an asset? cd u expand on this please?
regards
It’s the classic case of having to clear up your mess after decommissioning a, say, nuclear power station
The estimated future costs of decommissioning will need to be provided for
But, in the course notes, you’ll see the rhetorical question “Ah! But where’s the debit?”
Costs of decommissioning / site restoration and similar should be added to the cost of the nuclear power station / oil exploration drilling well at their estimated present values:
Dr TNCA
Cr Provisionand depreciated along with the power station / oil well over the station’s / well’s estimated useful life
OK?
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