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provision

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › provision

  • This topic has 0 replies, 1 voice, and was last updated 6 years ago by suleymanabuzerli.
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  • September 28, 2018 at 5:54 pm #475946
    suleymanabuzerli
    Member
    • Topics: 84
    • Replies: 32
    • ☆☆

    Driller Co undertakes oil and gas exploration activities. one of the conditions of the operating licence is that Driller must make good any damage caused to the local environment as a result of its exploration activities. As at the year-end date of 31 August 20X4,Driller Co estimated that cost of rectifying damage already caused at current exploration sites at 5$m. At that date Driller Co estimated that that the cost of rectifying expected future damage at current exploration sites at an additional $20 m
    Driiller Co also estimated that all current exploration sites will operate until 2017 or beyond that date

    how should this information be reported in the financial statements of Driller Co for the year ended 31 August 20X4?

    the correct answer
    there should be a provision classified as NON-current liability for 25 m$??

    but answer in kaplan has been taken Current liability
    l consider that this is not correct

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