Question

What are restoration costs and how should an organisation in the extractive industries account for restoration costs?

Answer 1

Restoration Cost:-

Restoration costs are the actual and imputed expenditures for activities aiming at the restoration of depleted or degraded natural systems, partly or completely counteracting (accumulated) environmental impacts of economic activities.

accounting for restoration costs:-

Such an amount is estimated with the help of a quotation from a renovator or building contractor. The depreciation entry is to record the cost capitalized into P&L on a straight-line basis. The reinstatement or restoration cost has to be expensed off on a straight-line basis until the end of the lease period