Case Study for Accounting 362

Case Study for Accounting 362 - 1 The authority on asset...

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1) The authority on asset retirement obligations is located on the FASB website, under the 410-20 section of the ASC. I am able to find the recognition, measurement, implementation guidelines regarding asset retirement obligations. Asset retirement obligations have to be recognized in the period it’s incurred at their fair value. For long lived asset’s it may be difficult to measure the fair value, but it should be recognized as soon as a reasonable measurement can be taken. According to the 410-20-25-5, once ARO’s are recognized, they increase the carrying value of its associated long-lived asset. These asset retirement costs are then expensed over the useful life of the event. All entities are obligated to recognize their ARO’s, and have sufficient information when, a. It is evident that the fair value of the obligation is embodied in the acquisition price of the asset b. An active market exists for the transfer of the obligation c.
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