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Hello,
I encountered a question regarding changes in discount rate when we unwinding the decommissioning cost. Discount rate is changing from 6%(last year) to 8% resulting in decrease in provision.
Decommissioning cost at year 5 = $300k
We recognise the cost last year. Hence the opening balance for this year is $238k.My question is how does the accounting treatment for this year as discount rate changing to 8%?
Do we applied it retrospectly or prospectively? And where do we recognise the changes in discount rate? Does it go to SOPL or value in asset?
Thank you
Assume the rate causes the opening provision to change from 10 to 12.
Dr PPE Cr Provision 2.
Then carry on as normal using the new discount rate.
Thank you for the explaining. How about treatment for changes in effective interest rate when measuring the financial asset at amortised cost?
Is that possible that the effective interest rate will changes? And do we correspondingly recognise at profit or loss?
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