UK Payments to acquire a new asset

Nov 8, 2018
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United Kingdom

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!

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