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Under Ind AS 101, the DECOMMISSIONING LIABILITY exemption permits an entity to:
ANot comply with the requirement to roll-back / add to asset cost decommissioning liability changes that occurred BEFORE the transition date — measure the liability at transition date conditions, roll back to asset addition date using best-estimate historical risk-adjusted rate, and recompute accumulated depreciation
BIgnore all decommissioning liabilities until they crystallise
CApply Appendix A of Ind AS 16 fully retrospectively from inception
DRecognise decommissioning at fair value at transition with no rollback
Answer & Solution
Correct answer: A. Not comply with the requirement to roll-back / add to asset cost decommissioning liability changes that occurred BEFORE the transition date — measure the liability at transition date conditions, roll back to asset addition date using best-estimate historical risk-adjusted rate, and recompute accumulated depreciation
Optional exemption (Appendix D) for decommissioning liabilities: measure liability at transition under Ind AS 37 using transition-date conditions; if liability is within Appendix A of Ind AS 16's scope, roll back to original asset-recognition date using best-estimate historical risk-adjusted rate and include in the asset cost; depreciation is then computed on the rolled-back basis from inception. This avoids the burden of reconstructing every past change.
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