Calculating Restoration Costs with Inflation and Discount Rates
10 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

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?

<p>€1,149,045</p> Signup and view all the answers

What are the reasons for the increase in the provision of €188,171 in the year ended 31 March 20X3?

<p>Passage of time and increase in estimated restoration costs</p> Signup and view all the answers

What is the journal entry to record the increase in provision in the year ended 31 March 20X3?

<p>DR Interest expense 24,022, DR ARO Asset 164,149, CR ARO provision 188,171</p> Signup and view all the answers

What is the purpose of recognizing a corresponding tangible fixed asset upon recognition of a provision?

<p>To matched the expense with the related asset</p> Signup and view all the answers

What is the effect of a decrease in the discount rate on the ARO provision?

<p>It increases the provision</p> Signup and view all the answers

How does an increase in estimated restoration costs affect the ARO provision?

<p>It increases the provision</p> Signup and view all the answers

Why is it necessary to review the ARO provision periodically?

<p>To ensure that the provision reflects the current best estimate of the restoration cost</p> Signup and view all the answers

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser