According to the environment law, an entity expects to spend $520$m in one year and $260$m in two years to address the consequences of an oil spill incident. The discount rate is $4\%.$

What is the accounting treatment of the interest expense related to the provisions next year?

Question $5$ Answer

a$.$

Credit "Interest expense" $20$m

b$.$

Debit "Interest expense" $20$m

c$.$

Debit "Interest expense" $20\mathrm{.}8$m

d$.$

Debit "Interest expense" $29\mathrm{.}6$m