Asset Retirement and Environmental Obligations Flashcards
1
Q
How is an Asset Retirement Obligation recorded?
A
The asset retirement obligation is recorded as a debit to the natural resources account (depletion base) and a credit to a liability.
2
Q
True or False: Environmental obligations are not directly associated with an asset
A
True
3
Q
How is accretion expense calculated?
A
Based on the liability.
ARO x credit-adjusted risk-free rate
4
Q
What is accretion expense?
A
Simply the increase in the asset retirement obligation over time
