In the context of a provision, what does 'accretion' refer to according to ASPE?

Accretion, in the context of a provision according to Accounting Standards for Private Enterprises (ASPE), refers to the process of recognizing an expense over time. This concept pertains specifically to liabilities that are discounted. When a liability is initially recorded at a present value (to reflect the time value of money), accretion involves the gradual increase in the balance of that liability as it approaches its settlement date. This is achieved by periodically adding interest expense, which reflects the unwinding of the discount.

For instance, if a company has an obligation that will require payment in the future, it may record the present value of that obligation as a liability. Each accounting period, the company recognizes an expense to reflect the increase in the liability due to the passage of time, thus ensuring that financial statements portray the true financial position and performance of the company accurately. This gradual recognition helps in matching expenses with the periods in which the related benefits are expected to be realized, adhering to the matching principle in accounting.