Accounting For Asset Retirement Obligation

This case gives students an opportunity to determine the accounting for impairment of long-lived assets in accordance with ASC 360-10.

According to ASC 410-20-25-10, instances may occur in which insufficient information to estimate the fair value of an asset retirement obligation is available. For example, if an asset has an indeterminate useful life, sufficient information to estimate a range of potential settlement dates for the obligation might not be available. In such cases, the liability would be initially recognized in the period in which sufficient information exists to estimate a range of

The value of fixed assets typically decreases over time. The amount of the decrease each year is accounted for and is called depreciation. Depreciation for the year is expensed on the income statement and added to the accumulated depreciation account on the balance sheet. So the value of the fixed assets on the balance sheet is reduced by the accumulated depreciation.

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount

The group project, Macmillan and Grunski Consulting, consists of two sections. The first part explains the case about discounted cash flow analysis, by answering the given nine questions. The second part discusses the retirement planning.

ASC 410-20-25-8 indicates that an asset retirement obligation is estimable if all of the following exist:

The state laws requiring LOI to remove the asbestos create an obligation to remove the asbestos under ASC 410-20-15-2a for the ten warehouses that LOI will sell within five years. ASC 410-20-25-8b indicates that an asset retirement obligation is estimable if all of the following exist:

Interest cost is the imputed interest on the liability during the year. The pension obligation also changes because of actuarial gains or losses that occur with the pension plan when the actuaries change their assumptions. For example, the pension liability will decrease and the company will record an actuarial gain if the actuary reduces the present value of the expected future payments (for example, by increasing the discount rate or decreasing the rate of wage increases). Last, the pension obligation decreases when benefits are paid to retirees. Paying benefits satisfies the obligation. c. The pension plan‟s assets increase when the assets earn a return (interest, dividends, capital appreciation). When securities and investments held by the plan drop in value, the plan‟s assets fall too. The plan assets

a. What is the authoritative guidance for asset impairment? Briefly discuss the scope of the standard (i.e., explain the types of transactions to which the standard applies)

For pensions and post-retirement accounting methods to recognize the benefit costs, estimates and assumptions on future events ascertaining the timing and amount of benefits payments must be sought first. This paper seeks to compare and contrast the early historical accounting for pensions and post-retirement healthcare and life insurance benefits with the rules and guidance applied today in addition to the changes to such guidance and rules that would improve the accounting and reporting of such benefits depending on the business and political changes and as such, predict the effect of such changes on financial reporting and accounting practices.

recognized. At worst, there is not sufficient information (based on ASC 410-2025-10) to determine the fair value of the asset retirement obligation as it is

The objective of AASB 116 is to stipulate the accounting treatment for property, plant and equipment, make user can understand information about an entity’s investment in its property, plant and equipment, and the changes in entity’s investment. The main issue for property, plant and equipment in accounting are the recognition of relationship between assets, the determination of their carrying amounts, the depreciation charges and impairment losses. AASB 116 required the entity disclose it’s information of gross carrying amount, depreciation method, depreciation rate, useful lives of PPE, accumulated depreciation and reconciliation of carrying amount at beginning of the reporting period and at end of the reporting period.

* To recognise separately, at the acquisition date, the acquiree’s identifiable assets, liabilities and contingent liabilities.

The group project, Macmillan and Grunski Consulting, consists of two sections. The first part explains the case about discounted cash flow analysis, by answering the given nine questions. The second part discusses the retirement planning.