Chapter 9 - Solution Manual

Fasb asc 360 property plant and equipment 10 overall

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FASB ASC 360 Property, Plant, and Equipment > 10 Overall > 50 Disclosure General 50-1 Because of the significant effects on financial position and results of operations of the depreciation method or methods used, all of the following disclosures shall be made in the financial statements or in notes thereto: a Depreciation expense for the period
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180 b Balances of major classes of depreciable assets, by nature or function, at the balance sheet date c Accumulated depreciation, either by major classes of depreciable assets or in total, at the balance sheet date d A general description of the method or methods used in computing depreciation with respect to major classes of depreciable assets. FASB ASC 9-2 Asset Impairment A search of “asset impairments” resulted in 130 entries. FASB ASC 9-3 Asset Retirement Obligations The discussion of asset retirement obligations is contained at FASB ASC 410 Found by searching “asset retirement obligations” or through the cross reference section using the original pronouncement number FAS 143. The relevant sections are 410-20, 25, 30 and 40. The answer should include the following at a minimum: 1. Asset retirement obligation. —the liability associated with the ultimate disposal of a long-term asset. 2. Asset retirement cost. —the increase in the capitalized cost of a long-term asset that occurs when the liability for an asset retirement obligation is recognized. 3. Retirement. —an other than temporary removal of a long-term asset from service by sale, abandonment, or other disposal. 4. Promissory estoppel. —a legal concept that holds that a promise made without consideration may be enforced to prevent injustice. For each asset retirement obligation a company is required to initially record the fair value (present value) of the liability to dispose of the asset when a reasonable estimate of its fair value is available. Companies are required to use SFAC No. 7 criteria for recognition of the liability, which is the present value of the asset at the credit adjusted rate. This amount is defined as the amount a third party with a comparable credit standing would charge to assume the obligation. Subsequently, the capitalized asset retirement cost is allocated in a systematic and rational manner as depreciation expense over the estimated useful life of the asset. Additionally, the initial carrying value of the liability is increased each year by use of the interest method using the credit adjusted rate and classified as accretion expense and not interest expense. In the event any of the original assumptions change, a recalculation of the obligation and the subsequent associated expenses is to be recorded as a change in accounting estimate. FASB ASC 9-4 Disclosure of Depreciation Found by accessing the Assets link, selecting Property, plant and equipment and selecting disclosure.
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