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IAS 37 - provisions and contingent liabilities - ACCA Financial Reporting (FR)

VIVA Subject Guide

6 Comments

  1. PRAVEEN
    What will be the Journal entry in example 1 please??
  2. yhoi13
    Hi Chris,

    As the Conceptual Framework has been revised so does it affect IAS 37? Do we need to know somefing regarding FR exam in September 2019?
  3. anamazingorange
    In the first example, why are there duplicate answers? You tick Create a provision twice. Is that just an error or am I missing something? Thanks.
  4. vijay
    Hi Cris,

    In the PPE dismantling cost treatment, you have shown PPE is debited and credited to provision.
    Now, why second entry called "unwiding" again credit provision? Isn't this duplication?
    Also cost going two times to P&L, firstly through depreciation and secondly to financing cost?
    Can you please clarify?
  5. MikeLittleTutor
    The amount involved in that original entry (Dr PPE and Cr Provision) is the PRESENT VALUE of the estimated future cost of dismantling the PPE

    Then, as each year goes by and we are one year closer to the dismantling date, that original present value of the estimated dismantling cost needs to be ‘unwound’ so that, all other things being equal, by the time the dismantling date is reached, there is the correct amount standing to the credit of the provision account

    And then the double entry will be Dr Provision Account Cr Cash with the amount paid out for dismantling

    Better?
  6. Jatin
    With which amount will the Provision be credited, is it the total amount of PV and unwound or is it just the unwound amount?

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