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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!
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!