Payments to acquire a new asset

UK Discussion in 'Technical Queries' started by MWilson3928, Nov 8, 2018.

  1. MWilson3928

    MWilson3928

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    Hi

    We're making prepayments over several years to acquire an asset (say £5m). At the end of these years we will own the asset. We also want to provide for this. We've had a stab at double entry, but a new thing for us, would anyone know how to account for:

    Cr Provision £5m B/S

    Dr Fixed assets: Prepayment to acquire a new asset £5m B/S (Don't depreciate until asset fully acquired and we own asset in x years)

    Then each year reduce the provision as pay installments

    Dr Provision £1m B/S

    Cr Cash £1m B/S

    Any help gratefully received!
     
    MWilson3928, Nov 8, 2018
    #1
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