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A company has just started mining in a new quarry where it has a legal obligation to restore environmental damage once quarrying is completed. Before mining starts, the overlying material (the "overburden") must be removed, causing environmental damage. The estimated cost (in a few years' time) of remedying the damage caused by removal of the overburden is £50,000 (ignore discounting).
Problem 1: The journal for the provision is:
A There is no provision.B Dr Provision £50,000 Cr Expenses £50,000C Dr Expenses £50,000 Cr Provision £50,000D Dr Non-Current Assets £50,000 Cr Provision £50,000
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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