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Hello Sir,
I just had quick question regarding depreciation of constructive liability that get capitalized.
For example If i purchase an item for 100K
The discounted value of the future obligation which is 50k (discounted) which gets capitalized.
Assuming the useful economic life is 5 years, I would depreciate 150k over 5 years?
regards
Hi,
Yes, you would depreciate the 150k over the 5 years. The present value of the provision is unwound through finance costs over the same five year period.
Thanks
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