alleryInitial estimate of dismantling cost on installation of asset is:
AAdded to inventory account
BCharged off at retirement
CProvided as reserve only
DCapitalised in asset cost
Answer & Solution
Correct answer: D. Capitalised in asset cost
1. AS 10 requires the initial estimate of dismantling and site restoration costs to be capitalised at recognition.
2. The matching liability is recognised as a provision.
3. Subsequent adjustments follow AS 29 / AS 10.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §2 cost components_
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