Exercise 11-59 Recording Asset Retirement Obligation LO6 BPP Company Maintains Underground Storage Tanks For Its Operations. For a piece of machinery with a total value of $100,000 and depreciation of $80,000, record the entry in the ledger on three lines. Further, entities must recognize depreciation expense resulting from the systematic and rational allocation of the asset retirement cost. Accretion expense measures and incorporates changes due to the passage of … DDB assumes asset is used more in its earlier life than in its later life; AKA - accelerated method. 6. ASC 410, Asset Retirement and Environmental Obligations, section 20 (ASC 410-20) contains the … This Roadmap is intended to help entities address the impact of certain environmental and asset retirement laws and regulations on accounting for environmental obligations and AROs. Offshore is legally required to dismantle and remove the platform at the end of its six-year useful life, at an estimated cost of $950,000. In that regard, the accounting for asset retirement obligations January 10, 2019 - IFRS 16 and IAS 16: Accounting for Asset Retirement Obligations I’ve posted a simple $100,000 acquisition to it. As a result of existing law, regulation, contractual or promissory estoppel, a company may be required to retire and remove certain facilities, including related obligations to restore the land to its original condition. The Complete Guide to Fixed Asset Accounting addresses all aspects of fixed asset accounting, including the most complex topics: asset impairments, asset retirement obligations, and asset revaluations. Asset Retirement Obligations Asset retirement costs shall be allocated to depreciation expense using a systematic and rational method. The Fixed Asset Accounting course comprehensively addresses every GAAP and IFRS accounting rule related to these crucial assets, including interest capitalization, asset retirement obligations, depreciation, impairment, and disposal. Question: L N 10 Years, And That The Company Uses The Straight-line Depreciation Method. Below is the first test asset. E13.15 (LO 5, 9) (Asset Retirement Obligation) On January 1, 2020, Offshore Corporation erected a drilling platform at a cost of $5,460,000. IAS 16 — Property, Plant and Equipment and IAS 17 Leases: Depreciation of assets leased under operating leases (November 2004) IAS 16 — Property, Plant and Equipment (May 2004) AcSB’s IFRS Discussion Group meetings. Accretion expense is similar to the interest cost component of pension expense - the growth in projected benefit obligation. This Portfolio details the requirements of ASC 410-20 focusing on definitions within this Codification Subtopic as well as initial and subsequent recognition and measurement of asset retirement obligations. The Commission is also revising its rate filing requirements to accommodate the above-mentioned changes. Summary of ASPE 3110 – Asset Retirement Obligations Definitions . As a starting point, area 01 shows the $100k acquisition on the asset. retirement obligations, capitalize the asset retirement costs, charge earnings for depreciation of the asset and charge operating expense for the accretion of the liability). Asset retirement obligation (ARO) – is a legal obligation associated with the retirement of a tangible longlived asset - that an entity is required to settle as a result of an existing or exacted … This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. 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