Asset Retirement Obligations

Question 1

How is change in decommissioning liability recognized under IFRS

Answer 1

The change in liability is recognized in profit or loss

Question 2

Formula for accretion expense

Answer 2

Credit adjusted risk free interest rate * fv of liability

Question 3

An entity should recognize the fair value of an asset retirement obligation in the period

Answer 3

In which the obligation is incurred if a reasonable estimate of fair value can be made

Question 4

JE initial recognition of a liability for an asset retirement obligation,

Answer 4

DR Asset
CR liability

Note: An entity shall capitalize any asset asset retirement cost by increasing the amount of the long lived asset by the same amount as the liability

Question 5

Components of asset retirement obligations

Answer 5

Obligation + Undiscounted Cash Flow + Acrettion expense less payment