- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
Dear Sir,
Could you please clarify my understanding that if the Company incurs dismantling/discommisioning cost (for example Future dismantling cost of 1000 in 3 years time at discount rate 10%) => The present cost of Dismantling: 1000/1.1^3 = 751 should be added to the cost of PPE but the interest should be recorded to P&L for three years as below:
Year 1: 751 *10%
Year 2: (751 + 751 *10%) * 10%
Year 3: ((751 + 751 *10%) * 10%)*10%Hi,
Yes, that is correct. We discount back to present value and capitalise the costs. The unwinding of the discount is then taken through profit or loss as a finance cost.
Thanks
Viewing 4 posts - 1 through 4 (of 4 total)
- You must be logged in to reply to this topic.