Ch. 11 - Decommissioning Provision

Question 1

Provisions, contingent Liabilities and Contingent Assets - IAS #

Answer 1

37

Question 2

Recognition Criteria:

Answer 2

1. a present obligation as a result of a past event
2. probable outflow of economic resources to settle the obligation
3. reliable estimate can be made for the obligation

Question 3

Recognition Criteria - Reliable Estimates cannot be made:

Answer 3

when an estimate cannot be made, it should be disclosed

Question 4

Initial Measurement

1. what’s it recorded at
2. how is it recorded

Answer 4

1. at the best estimate
2. If the TVM is material, include the discounted amount
3. The liability amount is added to the cost of the asset

Question 5

Ongoing Measurement - Liability

Answer 5

1. should be updated to the best estimate. Changes in estimates are to the liability and asset accounts.
2. should be updated for any changes in discount rate
3. Changes in PV (other than changes in estimate) are included in income as interest expense

Question 6

Ongoing Measurement - Asset

Answer 6

The asset is depreciated over its useful life. Therefore, the decommissioning portion will be added to net income over the assets useful life

Question 7

Asset Retirement Obligations - ASPE #

Answer 7

3110