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We capitalise the PV of the dismantling costs initially. We raise a provision (Liability) for the PV of dismantling costs too.
The increase in the PV of dismantling costs every year is added to the provision in the non current liability and the increase is also expensed as finance costs in P & L.However the increase in the iability instead of being expensed cudnt be capitalised?
Why is it chosen to expense and not capitalise?Hi,
The finance cost relates to the unwidning of the discount (the increase in the liaibility) and as such is expensed through profit or loss (think back to the Framework definitions of expenses). It does not bring any economic benefit and so would not be capitalised as an asset.
Thanks
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