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This is part of a ques in the bpp kit
“The natural gas station cost $15 million to construct, was completed on 1 June 20X2 and is to be dismantled at the end of its life of ten years. The present value of this dismantling cost to the joint operation at 1 June 20X2, using a discount rate of 5%, was $2 million.”
on 1 june 20X2, they r adding accumulated depreciation of 6.8/10 to the carrying amount of 40% of 15 m. why?
1. A joint venture is NOT a joint operation (please revise). If you say JV when you mean JO, you won’t get marks. Remember, most of the marks are for words not numbers in this exam. 🙂
2. If JO, company will include its share of jointly owned assets in PPE.
3. If there is a decommissioning provision, you add it to the CA of the PPE at the 1/6/x2. The total will then be depreciated over the life of the PPE.
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