Fixed asset abandonment costs are as follows:
Abandonment costs usually refer to expenditures determined in accordance with the obligations of environmental protection and ecological restoration assumed by an enterprise in accordance with the provisions of national laws and administrative regulations, international conventions, etc., such as the abandonment and restoration of environmental obligations for oil and gas assets, nuclear facilities of nuclear power stations, etc.
The amount of abandonment costs, when compared with its present value, usually differs significantly and requires consideration of the time value of money. For these specific fixed assets in special industries, enterprises should determine the amount to be included in the cost of fixed assets and the corresponding projected liabilities in accordance with the calculation of present value in accordance with the "Accounting Standard for Business Enterprises No. 13 - Contingencies". liabilities.
Interest expense determined in accordance with the amortized cost of the projected liabilities and the effective interest rate over the useful life of the fixed assets shall be included in finance costs.
Disposal costs of oil and gas assets shall be handled in accordance with the relevant provisions of ASBE No. 27 - Oil and Gas Extraction. The scrapping and cleaning costs incurred for fixed assets in general enterprises do not belong to disposal costs, and should be treated as fixed asset disposal costs when they are incurred.
All rights and obligations to settle cash beyond one year are subject to this line of fiber discounting because money has a time value. Suppose you need to spend 1 million dollars in two years to hire a certain construction company to demolish a certain asset, the interest rate is 10%, then you if you are willing to pay the construction company in advance at the moment, you only need to pay out 830,000 will be enough, the construction company to put in the bank in two years after the interest rolled over is 1 million.
But you don't, holding this 830,000 in your hand for daily operations, one year later you have to go back and count the money with the construction company, the figure will reach 910,000, which adds 80,000 is your cost of capital employed, that is, you use this 810,000 corresponds to the cost of the interest on the reputed interest. So, going back to point 0, that's $830,000 of LIQUIDITY, and then recognizing $80,000 of fiscal imitation costs and LIQUIDITY a year later.