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Capitalised provision

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Capitalised provision

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  • February 23, 2023 at 12:29 pm #679491
    MrPersonable
    Participant
    • Topics: 6
    • Replies: 7
    • ☆

    If a provision(at its present value of future cash flows) is capitalised and added to an asset, will it still need to unwinded every year until mature in the P/L

    February 26, 2023 at 7:47 pm #679648
    P2-D2
    Keymaster
    • Topics: 4
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    • ☆☆☆☆☆

    Yes, we unwind it every year by applying the interest rate to the provision. The aim being to grow the provision to the amount it is expected to be settled at.

    Thanks

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