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How is the provision accounted for over the three years

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Reference no: EM132535073

Ltd, estimates that it will be required to pay $15,000 in three years' time to settle a warranty obligation. The risk-free discount rate applied is 3.5 % and the probability of cash outflows has already been assessed in calculating the $15,000.

Required:

Question 1: How is the provision accounted for over the three years? Use a table with the following headings to show how the amounts are calculated for the provision over the three years.

Question 2: How to prepare the journal entries required for the three years.

Reference no: EM132535073

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