In this article you will learn how to model provisions.
- Click in the edit mode of the concerned Opex Item on the Input field "Method of payment". You will have the following 4 possibilities:
- Recurring Payment
- Recurring Pre Payment
- One-off Pre Payment
- In case of a provision you have to define the payment day.
- You have the option to work with relative date relations. For more information to relative date relations click here.
Example: In our case, we model provisions for decommissioning costs, which are paid at the end of the investment period. The estimated costs are 100,000 EUR.
Graphically provisions look as follows:
Profit & loss: The amount will be charged on an equal basis over the term.
Castflow: The total Cash Out will be at the end of the lifetime in 2014.
Balancesheet: The provision is continually built up in the balance sheet and released at the end of the term.