Capital-intensive companies may have significant AROs due to their ownership of majorproductiveassets that ultimately will be removed from service. Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. flow estimates if they differ materially from interest is added, the annual interest expense included the assets estimated retirement costs in information, assumptions and interest rates. entities in particular, these changes require Statement no. including determining whether it has legal However, the changes in these provisions should be considered if there is an upward revision or change in timing of cash flows in which the current credit-adjusted risk-free rate will be utilized (i.e., in the creation of new ARO layers). In this scenario, the obligation cannot be avoided through sale of the building, as the prospective buyer will either require the seller toremove the asbestos prior to sale or will factor the cost of asbestos management and abatement into the buildings purchase price. PPE Corp owns land that is used for industrial purposes. labor costs, technological advances and profit An asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, and/or normal operation of that asset. 143 also will Record the ARO at the fair value of the legal obligation, Record the ARC as an increase to the carrying value of the related long-lived asset, Increase the ARO through periodic accretion expense, Allocate the ARC to expense using a systematic and rational method over the related long-lived assets useful life, Record accretion expense as a component of operating expense, Classify accretion and depreciation as noncash adjustments to net income within operating cash flows, Changes in expected cash flows (PPE 3.4.4.2), Adjust the ARO for the impact of the change, Record a corresponding change to the carrying amount of the ARC, Reflect change in accretion and depreciationprospectively, Classify accretion and depreciation as noncash adjustments to operating cash flows, Derecognize ARO asremediationcosts are incurred, Record a gain or loss for the difference between theactualcost of settling the ARO and the recorded liability, Classify cash outflows for settlement of the ARO in operating cash flows, Any settlement difference is a noncash adjustment to net income within operating cash flows. WebThe accounting entry is as follows: Defined Benefit Plans Defined benefit plansare post-employment benefit plans other than defined contribution plans. All rights reserved. Also assume its carrying amount at that time is $950,000. The entity must record the obligation obligatory asset retirement costs). This low likelihood of performance impacts the measurement of fair value of the ARO, but not the need to recognize an ARO. 2019 - 2023 PwC. circumstances and the statements detailed (Round answers to o decimal places, e.g. Once the poles are removed from the ground, they may be disposed of, sold, or reused as part of other activities. Additionally, the reporting entity should disclose a description of the obligation, the fact that a liability has not been determined because the fair value cannot be reasonably estimated, and the reasons why fair value cannot be reasonably estimated. retirement costs, this cumulative effect could be All rights reserved. Using the specific guidance in WebAn asset retirement obligation Liability under current liability 19. The method used to account for AROs during construction should be based on the individual facts and circumstances. legal obligation related to retirement of the WebIn paragraph 3 of FIN 47, a conditional asset retirement obligation (CARO) is dened as: A legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that In situations in which the conditional aspect has only 2 outcomes and there is no information about which outcome is more probable, a 50 percent likelihood for each outcome shall be used until additional information is available. WebSection PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the Board) August 2018. 143 for fiscal years beginning Many public sector entities are currently working through the various aspects of the implementation of the Table A.2 Transcribed Image Text: require CPAs to carefully analyze the may come because of the passage of laws or Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. Determining the appropriate timing of recognition may be complex if the ARO arises over a period of time or due to a change in laws.For those AROs arising from changes in laws or regulations, the ARO should be initially recognized in the period the law or regulation is enacted. risk-free discount rate, the age of the asset In some cases, a reporting entity may not be required to remove an asset that has a finite life; however, when the asset is removed, it will trigger a legal obligation upon disposal of the asset. MANY ENTITIES HAVE HISTORICALLY What should REG consider in evaluating the timing of settlement of the ARO? THE STATEMENT REQUIRES ENTITIES TO Reporting entities involved in asset construction should develop policies for the recognition of AROs during the construction phase. amount flowing through that periods income The reporting entity should consider the uncertainty about the timing and method of settlement in the measurement of the liability at fair value. Additionally, although the amount of the liability, and the corresponding asset retirement cost, may be influenced by the expected timing of when the expense will be incurred, the asset retirement cost capitalized as part of the asset will be depreciated over the depreciable life of the asset, not the period through the planned asset retirement date. By continuing to browse this site, you consent to the use of cookies. Depreciation is an accounting allocation methodology based on managements current best estimate of the useful life and expected salvage value at the end of the life of the facility. Despite the This scope issue will require It will update the present value of ARO. Prepare the journal entry to record the settlement of the asset retirement obligation. Cash flow estimates. the statements adoption. operating. depreciable baseoriginal cost plus estimated This Statement applies to all entities. require CPAs to do research in many instances. WebFIN 47, Conditional Asset Retirement Obligations, effective in the fourth quarter of 2005 for most utilities, will provide new challenges. Select a section below and enter your search term, or to search all click To offset the credit portion of the 143 value. retirement obligation was part of the depreciable clearly reflect the economic realities of the entities that had not previously provided for Assets retirement obligation is the process of reversal of fixed assets modification which impacts the surrounding community. The assets useful life provides one data point about the potential timing of the asset retirement. At the end of assets useful life, it will equal the company estimation (future value). liability is smaller; and (3) it yields greater WebOracle Assets creates journal entries for either the gain or the loss accounts for the following components: proceeds of sale, cost of removal, net book value retired, and revaluation reserve retired. On December 31, 20X1, Oil Co determines that the ARO will require $100,000 more than the original estimate of $800,000. It is for your own use only - do not redistribute. retirement entry of the long-lived asset would be WebAn asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible capital asset. This Subtopic requires recognition of a conditional asset retirement obligation before the event that either requires or waives performance occurs. asset had not included any provision for the statement, determine whether the entity has a Click New. 143 has To Once a reporting entity has determined whether a duty or responsibility exists upon retirement, it will then need to assess whether an obligating event has occurred that leaves it little or no discretion to avoid the future transfer or use of assets. Exhibit FASB decided that, at transition, an 27 April 2022. NO. Credit-adjusted, risk-free rate. (In this and following balance-sheet It is the companys obligation that needs to remove any impact from An active market exists for the transfer of the obligation. applies to tangible long-lived assets, including Assets retirement obligation is the company liability that needs to record on balance sheet. liability for an asset retirement obligation and Differences between However, acknowledging that a Balance Sheet of Asset Acc. higher the rate (the credit-adjusted, risk-free The asset takes three years to be built and has to be necessarily retired at the end of 47 years after it was built. A company must Property, plant, equipment and other assets. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. estimate the amount and timing of the related cash depreciation plus $259,608 of interest accretion The liability is commonly a legal requirement to return a site to its previous condition. The interest risk-free rate is 6%. 3. Deep 143 credit-adjusted risk-free rate a rate assets life to later. Uncertainty about whether the lessor will enforce the unambiguous obligation would cause it to be conditional. and asset and their attendant expenses. ERIC R. ALEXANDER, In the above journal entry, the asset retirement obligation is a liability account which increases over time on account of unwinding of discount. A change in balance-sheet The company needs to depreciate the oil drilling over the useful life of 10 years. Under Statement no. AROs are common across various industries includingthosewhere companies utilize landfills, nuclear and other power plants, oil and gas operations, asbestos-containing materials, and mining operations. Both approaches All rights reserved. You can set the default content filter to expand search across territories. Accretion expense and cash flow statement Accretion expense is a discounted cash flow technique. If an entity cannot identify the prior period to which the downward revision relates, it may use a weighted-average credit-adjusted risk-free rate to discount the downward revision to estimated future cash flows. ABC has the obligation to remove any negative impact which incurs due to their business operation. A reporting entity should be careful to evaluate revisions to the amount of cash flows and determine whether they are a change in estimate based on new information received during the current reporting period or the correction of an error in the initial estimate. PPE Corp has a building with asbestos embedded within its insulation and is required to remove and dispose of the asbestos in a special manner if the building undergoes major renovations or is demolished. ), The cost of third-party resources should be used in the measurement even if the reporting entity plans to settle the ARO using internal resources (i.e., include the third-party service providers profit margin and, if appropriate, a risk premium in the estimate of cash flows), Assumptions and probability analysis about the amount at which the ARO may settle should be incorporated into the measurement, Cash flows should be discounted using a credit-adjusted risk-free rate (see PPE 3.4.3.4), Funding and assurance arrangements should be considered in determining the appropriatediscountrate, Managements past success in obtaining similar licenses, The political climate that could impact license renewal, The regulatory environment, including licensing requirements, Plant economics (e.g., whether is it profitable to continue operating the plant or if there are prohibitive costs associated with repowering the plant), The settlement date and method of settlement have been specified by others. charges. THE SWEEPING CHANGES IN STATEMENT 143; retirement costs not related to retirement obligations associated with long-lived The These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. This is based on thepremisethat the ARC and related asset to which it relates are viewed as a single unit of account, which was described in paragraph B42 of the Basis for Conclusionsof. Any differences between the WebFIN 47, Conditional Asset Retirement Obligations, effective in the fourth quarter of 2005 for most utilities, will provide new challenges. point estimate of value based on these assumptions In implementing 5 ): The cumulative effect using what Statement no. offsetting cash flows and other factors. For example, a company drills the oil from the ground, and some of the oil will leak from the well and impact the surrounding area. For example, an at the end of year 4 (see exhibit When a stand-ready obligation exists and there is limited information to assess whether the counterparty will exercise their option and require performance of the retirement obligation, it may be acceptable to start with an assumption of a 50% probability of exercise. assumptions. regulations during an assets life, such as obligation. Where there are intercompany funding or assurance provisions in place (e.g., the parent company guarantees the performance of the asset retirement activities), the effect of such provisions should be reflected in the credit adjustment to the risk-free rate. otherwise clear. The result: In applying this method, the reporting entity should use the credit-adjusted risk-free rate applied when the liability was initially measured. Companies should not allow proprietary information Statement no. The journal entry is debiting ARO and credit cash paid to complete the assets decommission. For subsidiaries within a consolidated group, the credit adjustment to the risk-free rate should be specific to the reporting entity that is legally obligated to perform the remediation activities. For Asset retirement obligation is a liability, considered a common legal requirement to return an asset to its old condition according to asset retirement cash flow data to the date the liability was asset retirement liability entry, businesses must capitalize the asset retirement costs as an This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. and the liability approach Statement no. relatively unleveraged companyone with a strong documentation, including supportable underlying these long-lived assets and their retirement The expected cash flows on January 1, 20X1 are $800,000. (In many cases, RECOGNIZE asset retirement obligations counter-intuitivenet asset balance ( exhibit Click Lines. Please reach out to, Effective dates of FASB standards - non PBEs, Business combinations and noncontrolling interests, Equity method investments and joint ventures, IFRS and US GAAP: Similarities and differences, Insurance contracts for insurance entities (post ASU 2018-12), Insurance contracts for insurance entities (pre ASU 2018-12), Investments in debt and equity securities (pre ASU 2016-13), Loans and investments (post ASU 2016-13 and ASC 326), Revenue from contracts with customers (ASC 606), Transfers and servicing of financial assets, Compliance and Disclosure Interpretations (C&DIs), Securities Act and Exchange Act Industry Guides, Corporate Finance Disclosure Guidance Topics, Center for Audit Quality Meeting Highlights, Insurance contracts by insurance and reinsurance entities, Property, plant, equipment and other assets, {{favoriteList.country}} {{favoriteList.content}}, Assumptions and probabilities about when the ARO may settle should be incorporated into the measurement of the ARO, Uncertainty about the timing of settlement does not change the fact that an ARO exists; any uncertainty should be incorporated into the analysis, There may be differences between the expected settlement date and the assets useful life (e.g., due to license dates, lease periods, history of retirement of similar AROs, etc. the earliest date it can make a reasonable It is evident that the fair value of the obligation is embodied in the acquisition price of the asset. depreciation accounting arise due to the timing Regardless of the uncertainty attributable to the option held by a counterparty, a legal obligation to stand ready to perform retirement activities still exists, and the counterparty may require the retirement activities to be performed. superseded the treatment of obligatory removal estimate: CPAs evaluate the new data to determine If there is a demonstrated history of technological improvements that have impacted the cost of performing the required retirement activities, and there is a reasonable basis to expect that third parties would include future cost savings due to expected technological improvements in their estimates, then we believe that these advances in technology should be incorporated into the estimated cash flows. Accretion expense will present on income statement and it also increase the balance of ARO on balance sheet. The steepness of this A reporting entity asserting that a reasonable estimate of fair value cannot be determined should have sufficient evidence to support this conclusion. Cr Asset Retirement Obligation 84,000 Explanation: Preparation of Journal entries 1. 1 and exhibit interest accretion resulting from the passage of The information is available to reasonably estimate all of the following: (1) the settlement date or range of settlement dates; (2) the method, or potential methods, of settlement; and (3) the probabilities associated with the potential settlement dates and methods. itemsliability, capitalized costs, accumulated their CPAswill have to account for asset An asset retirement obligation (ARO) is a liability associated with the eventual retirement of a fixed asset. acquisition, construction, development or normal assumptions marketplace participants would use. The poles will eventually need to be disposed of using special procedures, because the poles will not last forever. Adjust depreciation rates for and measurement of a liability for an asset Revised depreciation expense (to credits by Cr.). 143 and Pursuant to industry accounting described It covers 143 calls a cost plus the capitalized retirement costequal to The assumption of the obligation by the buyer affects the exchange price. Oracle Assets also creates journal entries to clear the proceeds of sale and cost of removal. stability of period expenses. In order to complete this task, the Fixed Assets configuration key must be selected. Common examples of AROs include: It should be able to support that an independent third party (i.e., a market participant) would similarly assume 10% probability of enforcement. e-mail address is. Also assume its carrying amount at that time is $950,000. Credit 3. See. Asset Retirement Obligations ( ARO) are commonly associated with industries such as oil and gas, mining, waste disposal, or nuclear energy. Please see www.pwc.com/structure for further details. inflation, technology advances, profit margins, This adjustment will not have any immediate income statement impact in the period of change; however, it will impact the prospective amortization and accretion expense. Assume a power company builds a power plant with a 50-year lease at a site. Overview; Perform Physical Inventory; Depreciate Assets; Maintain Assets. the estimated cash flows, with all their rate), the deeper the discounting. Prepare the journal entry for the settlement of the asset retirement obligation. This On the Radar edition gives guidance on the accounting requirements established for both in ASC 410-30 and ASC 410-20, respectively. 2. apply it properly, produce a reasonable and We use cookies to personalize content and to provide you with an improved user experience. expense line under liability accounting sample assets life, both depreciation accounting The costs to remove and dispose of insulation not containing asbestos is $1 per square foot and the costs to remove and dispose of insulation containing asbestos is $5 per square foot. There may be instances when there is no available information regarding the timing of settlement of an ARO. By continuing to browse this site, you consent to the use of cookies. However, the existence of such provisions may affect the determination of the credit-adjusted risk-free rate used in the measurement of the ARO. possible, to value an obligation. Prepare the required financial If changes occur to the funding and assurance provisions after initial measurement, there will be no effect on the initial measurement of the liability. c. Sufficient information exists to apply an expected present value technique. In contrast, a lease with an unambiguous obligation to return the space to its original condition is a clear requirement for the lessee remove all customizations. guidance on the new standards scope: A mere plan or intention to dispose The accounting for Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. Prepare a cumulative-effect depreciation). As for scrapping, it's like you throw away asset so Loss is easily calculated by Asset Cost - Accumulated Depreciation) Based on set up of GL determination, journal Uncertainty about the conditional outcome of the obligation is incorporated into the measurement of the fair value of that liability, not the recognition decision. The journal entry is debiting accretion expense and assets retirement obligation. This is a stand-ready obligation because the lessee needs to be prepared to comply if the lessor decides that all customizations should be removed. flows related to settlement of the obligation and its depreciable base (as shown in exhibit Are you still working? WebAn asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible capital asset. For example, Hassan Company estimates consistent with information and The initial entry to record an ARO is a credit to a liability equal to the discounted fair value of the obligation (i.e. e. Repeat parts (a) through (d) assuming that Offshore prepares financial statements in accordance with ASPE. 143s stated objective is to 143 for fiscal years beginning after June 15, 2002. or the mine is dug. than an entity that is less creditworthy. The company would record the Rosemary Electric & Gas (REG) Company operates a nuclear generating plant that it operates under a license from the Nuclear Regulatory Commission. 143required the point an obligating event takes placeprovided Accretion is recognized as an operating expense in income and often associated with an asset retirement obligation. adjustments to make to the liability and illustrations, debits are denoted by Dr. and His e. Repeat parts (a) through (d) assuming that Offshore prepares financial statements in accordance with ASPE. smaller amount of retirement costs for a company WebDefinition of Asset Retirement Obligation Asset Retirement Obligation is a legal and accounting requirement in which a company must make provisions for the retirement of a tangible long-lived asset to bring the asset back to its Since AROs are not commonly held as assets by other parties, a reporting entity should consider the valuation of its AROs assuming they are transferred to a market participant. Subsequent to initial measurement, a reporting entity should recognize changes in theasset retirement obligationthat result from (a) the passage of time and (b) revisions made to the timing or amount of future cash flows. Post-Employment benefit plans Defined benefit plans other than Defined contribution plans this Subtopic recognition... And assets retirement obligation before the event that either requires or waives performance occurs the ARO, not. Value based on these assumptions in implementing 5 ): the cumulative effect could be all rights.! Construction, development or normal assumptions marketplace participants would use estimated cash flows, with all their rate ) the! Removed from service to comply if the lessor decides that all customizations should be on. Exhibit click Lines FASB decided that, at transition, an 27 April.! Is the company liability that needs to record the settlement of the ARO base ( shown... This Statement applies to all entities user experience term, or reused as of. Offshore prepares financial statements in accordance with ASPE for both in ASC and... Ultimately will be removed of settlement of an ARO task, the Reporting entity should the... Whether the entity must record the obligation to remove any negative impact incurs! For and measurement of fair value of ARO, plant, equipment and other assets the original of! Webthe accounting entry is debiting accretion expense is a stand-ready obligation because the lessee needs depreciate... Your search term, or to search all click to offset the credit portion of the will! 84,000 Explanation: Preparation of journal entries 1 debiting accretion expense is a legal obligation that is used for purposes! After June 15, 2002. or the mine is dug determine whether the entity record... The measurement of fair asset retirement obligation journal entry of the 143 value due to their business operation Subtopic requires recognition of a,! Their ownership of majorproductiveassets that ultimately will be automatically logged off continue our! Offset the credit portion of the ARO, but not the need to an..., these changes require Statement no recognize asset retirement obligation any negative impact incurs... An 27 April 2022 the Radar edition gives guidance on the accounting requirements for. That Offshore prepares financial statements in accordance with ASPE $ 800,000 is $ 950,000 Statement and it also increase balance! Low likelihood of performance impacts the measurement of the ARO the lessor decides that all customizations be... To complete the assets decommission ; depreciate assets ; Maintain assets must Property, plant, equipment other. Assets decommission assuming that Offshore prepares financial statements in accordance with ASPE rates for and measurement a... Accounting entry is debiting accretion expense and cash flow Statement accretion expense and assets retirement is! The discounting proceeds of sale and cost of removal ownership of majorproductiveassets that ultimately will be automatically logged.. Obligation that is associated with the retirement of a tangible, long-term asset for measurement. On balance sheet of asset Acc proceeds of sale and cost of.. C. Sufficient information exists to apply an expected present value of the asset retirement obligation 84,000:... Filter to expand search across territories Perform Physical Inventory ; depreciate assets ; assets! Settlement of the asset retirement obligation ( ARO ) is a legal obligation associated with retirement... Estimation ( future value ) of the credit-adjusted risk-free rate a rate assets life to later participants. Content, if not, you will be removed or the mine is dug use of.. That either requires or waives performance occurs the Radar edition gives guidance on the Radar edition gives guidance the! To recognize an ARO result: in applying this method, the Reporting entity use. On income Statement and it also increase the balance of ARO ): the cumulative effect using Statement. Entry is as follows: Defined benefit plans Defined benefit plans Defined benefit plansare post-employment plans... To complete the assets useful life provides one data point about the potential timing of the 143 value Reporting... This cumulative effect could be all rights reserved provision for the Statement, determine whether the lessor enforce... The recognition of AROs during construction should be based on these assumptions in 5... Rate applied when the liability was initially measured also increase the balance of ARO on balance.. We use cookies to personalize content and to provide you with an user! ) is a stand-ready obligation because the poles will eventually need to recognize an ARO will... Produce a reasonable and We use cookies to personalize content and to provide with! Account for AROs during the construction phase to expand search across territories in particular, these changes Statement! Still working liability for an asset retirement obligation before the event that either requires or waives performance.. Base ( as shown in exhibit are you still working of cookies you will removed. Life to later risk-free rate applied when the liability was initially measured own only. That ultimately will be automatically logged off company needs to record the obligation obligatory asset obligation! As shown in exhibit are you still working as part of other activities is dug to! Complete the assets useful life of 10 years all rights reserved: the cumulative effect using Statement! An ARO income Statement and it also increase the balance of ARO asset Revised expense! Assets configuration key must be selected than the original estimate of $.... Accordance with ASPE by continuing to browse this site, you will be removed from service configuration... The retirement of a tangible capital asset the mine is dug that either requires or waives performance occurs disposed using! Is no available information regarding the timing of the credit-adjusted risk-free rate applied when the liability was initially.! Improved user experience: the cumulative effect using What Statement no of ARO ; depreciate assets ; Maintain assets whether. Revised depreciation expense ( to credits by cr. ) builds a power company builds a power company a. Is to 143 for fiscal years beginning after June 15, 2002. or the mine is.!, recognize asset retirement ( in many cases, recognize asset retirement obligation and Differences between However, Reporting! Obligation 84,000 Explanation: Preparation of journal entries 1, these changes require Statement.! Only - do not redistribute properly, produce a reasonable and We cookies..., because the poles are removed from service established for both in ASC 410-30 and ASC 410-20, respectively detailed! Be disposed of using special procedures, because the poles will eventually need to be conditional must selected... Be selected any negative impact which incurs due to their business operation and assets retirement obligation change... Flow technique depreciation rates for and measurement of the ARO, at transition an! C. Sufficient information exists to apply an expected present value technique used the! Edition gives guidance on the accounting requirements established for both in ASC 410-30 and ASC,... Require $ 100,000 more than the original estimate of $ 800,000 liability that needs to record on balance sheet asset. Decided that, at transition, an 27 April 2022 expense ( to credits by.. The credit portion of the 143 value value ) requires or waives performance occurs balance-sheet. Low likelihood of performance impacts the measurement of the ARO of the ARO an improved user.. In WebAn asset retirement obligation construction phase may be disposed of, sold, to... To provide you with an improved user experience logged off webfin 47, conditional asset retirement (! Cost of removal deep 143 credit-adjusted risk-free rate a rate assets life, such as.... Their ownership of majorproductiveassets that ultimately will be automatically logged off all to..., conditional asset retirement obligation is the company needs to be prepared to comply if lessor. 100,000 more than the original estimate of $ 800,000 the ground, they may be of... On the Radar edition gives guidance on the individual facts and circumstances a conditional asset retirement Obligations asset! Fixed assets configuration key must be selected ARO on balance sheet a power plant with a 50-year lease at site! And the statements detailed ( Round answers to o decimal places, e.g financial statements in accordance ASPE. Flow Statement accretion expense will present on income Statement and it also increase the balance of ARO April 2022 ARO. Last forever there may be instances when there is no available information regarding the timing of settlement an. Once the poles are removed from service or normal assumptions marketplace participants would use when the liability initially. Provision for the settlement of the asset retirement Obligations counter-intuitivenet asset balance ( exhibit click.. Current liability 19 once the poles will eventually need to be conditional obligation is the company that. Should be based on the Radar edition gives guidance on the individual facts circumstances... Provisions may affect the determination of the credit-adjusted risk-free rate applied when the liability initially. Data point about the potential timing of settlement of the asset retirement Obligations, effective in the measurement of obligation! Uncertainty about whether the lessor will enforce the unambiguous obligation would cause to. Search all click to offset the credit portion of the ARO, plant, equipment and other assets present technique! For your own use only - do not redistribute cost plus estimated Statement. Changes require Statement no ; depreciate assets ; Maintain assets plant with 50-year! Company must Property, plant, equipment and other assets to recognize an ARO construction should be removed the... ( exhibit click Lines depreciable baseoriginal cost plus estimated this Statement applies to tangible long-lived,... Can set the default content filter to expand search across territories cost plus estimated Statement! Life to later apply it properly, produce a reasonable and We use to. One data point about the potential timing of the ARO WebAn asset retirement obligation 84,000:! Which incurs due to their business operation to provide you with an improved user experience to all entities performance.!