Mike, when we unroll present value of future payments that were capitalised on TNCA at some point we debit financial costs on this sum, and what account does the credit go to?
Ask the Tutor ACCA FR
debit fin costs - credit what?
10y ago#1The credit goes towards building up the value of the obligation to the supplier, held in a provision account.
Dr Finance Costs
Cr Long term (or short term, if we're less than 1 year from due payment date) liabilities
OK?
right. well, I think in this particular case it's a provision then, coz we capitalised the provision on future payments related to reduction of the environmental damage caused by the plant.
ok, thank you :)
10y ago#3That sounds right - so on the statement of financial position, the retained earnings will have been decreased by the amount of the unwound discounted obligation and the provision for the obligation itself will increase by that same amount
I should think so
that's why I appreciate accounting, for its adherent logic :)
10y ago#5Isn't it magical! And to think, some people find it boring!
they probably don't understand it much, that's why.
the more I learn... well, the more I like it :)
10y ago#7Atta girl! Way to go! :-)
Sign into reply to this topic.