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Forensic Accounting

dismantling cost of property, plant and equipment


according to IAS 16 the present value of dismantling cost must be added in the cost of asset at recognition but what is the subsequent treatment of dismantling cost?

asked Nov 17, 2016 in IAS 16 - Property, Plant and Equipment by anonymous

1 Answer

+1 vote
 
Best answer

Initially Dismantling cost is included in cost of Asset at Present Value and on other end counter Liability of dismantling provision is recorded.

Subsequent treatement - Each year dismantling cost increase due to unwinding( addition of finance charge each year )  and as result of which amount of dismantling provision increases. At end of life of Asset , it is fully depreciated and also after dismantling provision is written  off as Asset is dismantle and site is restored to orignal position. 

Hope you have now understand completely the initial and subsequent recognition of dismantling cost.

If want more eleboration , let us know so that we can add further explaination and examples

answered Nov 17, 2016 by Bilal Ahmad Level 1 Member (1,820 points)
selected Dec 8, 2016 by umar1621



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