F10: Asset Retirement Obligations

Question 1

What is an ARO?

Answer 1

A legal obligation (liability) associated with retirement of a tangible long-lived asset that results from the acquisition, construction, or development and/or normal operation of a long-lived asset

Question 2

ARC

Answer 2

Asset Retirement Cost
-the amount capitalized (asset) that increases the carrying amount of the long-lived asset when a liability for an ARO is recognized

Question 3

Accretion Expense definition

Answer 3

The increase in ARO liability due to the passage of time calculated using the appropriate accretion date

Question 4

Depreciation Expense definition

Answer 4

Decreases the ARC asset reported on the balance sheet