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Provisions
Good day.
For illustration on PPE & provisions why is depreciation charged on cost of PPE plus decommissioning cost (not calculation to its present value.)Hi,
The provision has already been discounted to present value and added to the cost of the PPE. We then simply depreciate this combined figure, with no further adjustment for discounting to present value as the provision amount in PPE is already at present value.
The only adjustment for discounting is made to the provision when it is unwound to its terminal value using the applied discount rate, and this adjustment is taken through finance costs.
Thanks
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