10 Questions
What is the ARO provision and ARO asset recognized at the year ended 31 March 20X2?
€960,874
What is the reason for the increase in the provision of €23,436 in the year ended 31 March 20X2?
Passage of time
What is the journal entry to record the increase in provision in the year ended 31 March 20X2?
DR Interest expense 23,436, CR ARO provision 23,436
What is the ARO provision and ARO asset recognized at the year ended 31 March 20X3?
€1,149,045
What are the reasons for the increase in the provision of €188,171 in the year ended 31 March 20X3?
Passage of time and increase in estimated restoration costs
What is the journal entry to record the increase in provision in the year ended 31 March 20X3?
DR Interest expense 24,022, DR ARO Asset 164,149, CR ARO provision 188,171
What is the purpose of recognizing a corresponding tangible fixed asset upon recognition of a provision?
To matched the expense with the related asset
What is the effect of a decrease in the discount rate on the ARO provision?
It increases the provision
How does an increase in estimated restoration costs affect the ARO provision?
It increases the provision
Why is it necessary to review the ARO provision periodically?
To ensure that the provision reflects the current best estimate of the restoration cost
This quiz covers the calculation of restoration costs considering historic rates, inflation, and discount rates. It involves applying discounting, inflation, and risk-free rates to determine present value.
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