ACCA · Question 25 · Financial Reporting
Section B - Case 2: TidalWave Energy
TidalWave Energy has a legal obligation to decommission the tidal lagoon at the end of its 20-year life. The present value of this obligation on 1 January 20X4 was $2,500,000. The discount rate is 5%.
What is the double entry to record the unwinding of the discount on this provision for the year ended 31 December 20X4?
Answer options:
Debit Property, Plant and Equipment $125,000; Credit Provision $125,000
Debit Finance Cost $125,000; Credit Provision $125,000
Debit Provision $125,000; Credit Finance Income $125,000
Debit Operating Expense $125,000; Credit Provision $125,000
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