PROVISION

MOBY
On 1 October 20X2, Moby received a renewal quote of $400,000 from their property
insurer. The directors were surprised at how much it had increased and believed it
would be less expensive to ‘self?insure’. Accordingly, they charged $400,000 to
operating expenses and credited the same amount to the insurance provision. During
the year expenses of $250,000 were incurred, relating to previously insured property
damage which Moby has debited to the provision
Required:
(a) Prepare a schedule of adjustments required to the retained earnings of Moby as at 30 September 20X3 as a result of the information in notes (1) to (5) above.

(b) Prepare the statement of financial position for Moby as at 30 September 20X3.

SOLUTION
(a) Moby – Statement of adjustments to retained earnings as at 30 September 20X3
Removal of provision (W5) 150

Good day, Please i don’t understand why the 150$ wasn’t included in the current liabilities as provision in the statement of financial position. In the answer, it was only included in the retained earning schedule. I’ll appreciate if you can explain better