Question

An oil company constructs a drilling platform at a cost of ₹200 crore. It estimates a dismantling cost of ₹30 crore at the end of 25 years. The present value of this dismantling cost is ₹7 crore. How should this be accounted for initially?

A ₹200 crore as cost and ₹7 crore as provision
B ₹230 crore as cost of asset
C ₹200 crore as cost; ₹30 crore as contingent liability
D ₹207 crore as cost of asset with corresponding liability
E ₹200 crore only, dismantling cost ignored
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