In 2023 Collingwood Ltd commenced operating a power generating facility in outback Australia. The company has a legal obligation to remediate the site when it closes the operation which is expected to be in 20 years' time. As at 30 June 2023 the best estimate to remediate the site (in 2043) is $10,000,000. 4 One year later the best estimate of remediating the site (in 19 years' time) is $15,000,000. The pre-tax rates that reflect current market assessments of the time value of money and he risks specific to the liability were 7% as at 30 June 2023 and 8% as at 30 June 2024. Provide the journal entries in relation to the above obligation for the years ending 0 June 2023 and 30 June 2024. Ensure narrations are shown for all journal entries.
In 2023 Collingwood Ltd commenced operating a power generating facility in outback Australia. The company has a legal obligation to remediate the site when it closes the operation which is expected to be in 20 years' time. As at 30 June 2023 the best estimate to remediate the site (in 2043) is $10,000,000. 4 One year later the best estimate of remediating the site (in 19 years' time) is $15,000,000. The pre-tax rates that reflect current market assessments of the time value of money and he risks specific to the liability were 7% as at 30 June 2023 and 8% as at 30 June 2024. Provide the journal entries in relation to the above obligation for the years ending 0 June 2023 and 30 June 2024. Ensure narrations are shown for all journal entries.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 13P
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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