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Sir, the damage costs are estimated at the end of 10 years and included in the PV cost of 15,000.
So, if this is to be unwound the normal way then will this 10% PV cost be included in value of the asset as well, or another provision will be created?
(Because of IAS 16, the cost of an asset will only include direct costs and dismantling costs. I dont know if damage related costs will be included in the asset)
And, if this provision is spread equally over the 10 year life as these cost will crystallised, these costs are also unwound. Would that be correct?
Thanks
“will this 10% PV cost be included in value of the asset as well, or another provision will be created”
The double entry for the unrolling will be:
Dr Finance costs
Cr Provision“I dont know if damage related costs will be included in the asset” – given the history of previous questions, the 10% damage is more likely to be period related
I don’t think the damages amount will be included within a provision account
You really need to be more specific for me, sorry
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