RE:RE:RE:Tug'n it - If size matters Ferret, your comment makes me wonder if you understand how current liabilities and debt are related. You’ve spent the last week trying to confuse punters about the difference between debt and current liabilities. I thought Naka had addressed this sufficiently to end the thread, but you’re still at it.
An accrual under current liabilities is an expense recognised before the cost is paid out. The expected costs of securing, installing and commissioning the FPF-1 will be accounted for under ‘accruals and deferred income’ (a subset of current liabilities) of $177m at 30 June 2015. I don’t know the terms of the contract and neither do you, but it’s quite possible that a fixed cost has been agreed. If weather is a risk factor then the at risk party, let’s say Ithaca, may insure against this risk, in which case the cost of premium is also recorded under current liabilities.
When the job has been completed and payment made, the cash component of current assets will fall, but the estimated liability costs will be removed from the current liabilities. That is why it’s called a balance sheet.
You might have missed it, but recently Ithaca has been reporting capital expenditures coming in below budget due to falling costs in the industry.
I am not an accountant so one might pick me up on the detail of my comment, but that is the gist of it.
Londoner7