Accounting for asset retirement obligations

Accounting for asset retirement obligations. 143, (FAS 143) Accounting for Asset Retirement Obligations (AROs) to change this requirement. Section 3110 does not apply to: Obligations arising solely from a plan to sell or otherwise dispose of a long-lived asset subject to Section 3475. • May 12, 2014 · January 10, 2019 - IFRS 16 and IAS 16: Accounting for Asset Retirement Obligations; October 16, 2018 - IFRS 16 and IAS 16: Accounting for Asset Retirement Obligations; May 30, 2017 - IFRS 9, IFRS 15 and IAS 16: Seller’s Right to Variable Consideration in an Asset Sale; November 29, 2016 - IAS 16: Capitalization of Costs ADMINISTRATOR SUMMARIZED TO PROVIDE BUSINESSES WITH INSTRUCTION ON WHEN and how to recognize a general for asset retirement commitments, FASB displayed Statement none. This Statement will likely have the following effects on current accounting practice: • Total liabilities generally will increase because more retirement obligations will be Page 5 An Asset Retirement Obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset in which the timing or method of settlement may be conditional on a future event, the occurrence of which may not be within the control of the entity burdened by the obligation. GAAP) while leveraging integration with SAP S/4HANA Cloud Oracle: Accounting for Asset Retirement Obligations ; The CPA Journal: Accounting for Asset Retirement Obligations ; Cornell University Legal Information Institute: 18 CFR 367. 4 Initial Recognition of AROs and ARCs 4. B) They must be recognized according to GAAP. 6. Section PS 3280 - Asset Retirement Obligations. FAS 101 - FAS 150. 143, Accounting Section 3110 applies to: Legal obligations associated with the retirement of a tangible long-lived asset that results from its acquisition, construction, development or normal operation. 18. ( b) The service company must initially record a liability for an asset retirement obligation in account 230, Asset retirement obligations ( § 367 Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. Summary. It is routine for lessees to have AROs associated with their real estate Jun 24, 2022 · Retirement accounting that includes asset retirement obligations is important, as it allows a company to plan for the expenses related to retiring assets when they are no longer in use. Nov 19, 2002 · The Commission proposes to add a new instruction to General Instruction 20, Accounting for leases, that provides when an entity incurs an asset retirement obligation through assumption of a capital lease, the entity must recognize the liability in account 230, Asset retirement obligations, and record the related asset retirement costs in B: They must be recognized according to GAAP. Required: 1. FAS 143 requires the recognition of the fair value of asset retirement obligations (ARO) liability in the period in which it is incurred This course covers the accounting for asset retirement obligations (AROs) in accordance with ASC Topic 410: Asset Retirement and Environmental Obligations, specifically the initial and subsequent measurement of AROs, distinguishing between an ARO and an environmental obligation, and the accounting requirements of AROs. De­fer­ral of Sec­tion PS 3280 due to Covid-19. 6 Subsequent Measurement of AROs and ARCs 4. timing of future cash fows. Determine the specific Codification citation for each of the following, based on the format indicated: (a) accounting for asset retirement obligations (XXX-XX), (b) recognition criteria related to asset May 19, 2017 · As per Ind AS, An Asset Retirement Obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset in which the timing or method of settlement may be conditional on a future event and Decommission Liability is the Estimated amount of dismantling and restoration cost that a company expects to incurred in the future on the Asset Dismantling Date. 18 CFR § Park. It further states that plant decommissioning costs represent costs incurred in the Research Case 10–2 (Static) Part 1 and 2. This category of conditional obligation is closer to an unconditional obligation. Before PS 3280, ARO guidance was limited to PS 3260, Liability for Contaminated Sites, and PS 3270 Solid Waste Closure and Post-Closure Liability. These include accounting for employee future benefits, financial instruments, and hedges under ASPE and ASNPO, and accounting for asset retirement obligations and financial instruments under PSAS. org). D: All of the other answer choices pertain to accounting for asset retirement obligations. February 20, 2002. 143, Accounting forward Asset Retirement Obligations— which was seven time in the making—shifts to a balance-sheet how, requires businesses to recognize a liability for a retiring obligation when they incur it—even if ensure exists far in advance of which asset’s planned retirement. Recognition of estimated costs for future retirement activities is not new to some FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. Publication date: 30 Jun 2022. Uncertainty Uncertainty about the timing of settlement of an asset retirement obligation does not remove the obligation from the scope of Section PS 3280. a. In addition to these areas, this guide addresses a variety of other topics including the accounting for asset acquisitions, asset retirement obligations, environmental obligations, insurance recoveries, and . The accounting for these obligations is covered under FASB ASC 410, or Accounting Standards Codification Statement No. 515, Accounting for Asset Retirement Obligations. An ARO represents a legal or constructive obligation to perform certain activities related to the retirement of a long-lived asset. TO ALL JURISDICTIONAL PUBLIC UTILITIES, LICENSEES, NATURAL GAS COMPANIES, AND OIL PIPELINE COMPANIES SUBJECT: ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (FAS) No. The statement applies to retirement obligations for tangible long-lived assets. 2 Overview of ASC 410-20 4. ASC 410-20-15-2. This new Sec­tion es­tab­lishes stan­dards on how to ac­count for and re­port a li­a­bil­ity for as­set re­tire­ment oblig­a­tions. 1. Who asset retirement obligation is effizienz a sort of debt which incurs interest costs over the period. Companies in several industries have to get an asset back to its original state after the asset is taken Jul 15, 2022 · What is an asset retirement obligation? Under Section PS 3280 of the Public Sector Accounting Standards (PSAS), an ARO is a legal obligation associated with the retirement of a tangible capital asset. 410. AI02-1-000. It is also important because employees and owners, including stakeholders, often need to be aware of potential expenses like that as they make business decisions. 1 Introduction 4. In August 2018, the Public Sector Accounting Board released a new public sector accounting standard, PS 3280, Asset Retirement Obligations (ARO). , An asset is acquired using a noninterest-bearing note payable for $225,000 due in three The amount recognized for the liability and an associated asset retirement cost must be stated at the fair value of the asset retirement obligation in the period in which the obligation is incurred. Statement of Financial Accounting Standards No. The article explains the provisions Mar 25, 2024 · Understanding Asset Retirement Obligations An Asset Retirement Obligation (ARO) pertains to a liability associated with the retirement of a tangible, long-lived asset. This On the Radar edition gives guidance on the accounting requirements established for both in ASC 410-30 and ASC 410-20, respectively. Upon adopting the standard on January 1, 2003, an asset book value of $142,303 (which is $2,303 greater than the amount of the book value of the asset without the ARO cost) and a related liability Jul 12, 2023 · Journal entries related to an organization’s commitment to retire a certain asset at the end of its service life can be recorded. FASB Statement no. systems - Accounting for asset retirement obligations. Step 1. Some examples specific to the oil and gas industry include oil well plugging and abandonment and underground storage tank removal. uncertainty in future cash fows. An asset retirement obligation frames responsibility of t In accounting for Assets Retirement Obligation (ARO), a. C) Statement of Financial Accounting Concepts No. 5. US GAAP rule ASC 410 provides guidance on the recognition and measurement of asset retirement obligation. ARC is allocated to expense over the useful life of the asset. These obligations typically arise from laws, regulations, contracts, or other 143, Accounting for Asset Retirement Obligations— which was seven years are the making—shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it—even while that is far the advance of the asset’s planned disability. An asset retirement obligation (ARO) is a legal or contractual obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, and The need for the recognition and reporting of asset retirement obligations (AROs) arises from requirements issued by Financial Accounting Standards Board (FASB), International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Securities and Exchange Commission (SEC) guidelines, Sarbanes-Oxley legislation, German local GAAP (HGB), and other standard-setting entities. • World oil and gas decommissioning liabilities c. Accounting for reclamation obligations requires mining entities to assess various signifcant estimates, including uncertainties related to those estimates, when determining the measure-ment of their reclamation obligations, such as: amount of future cash fows. Under US GAAP, if a company enters into a lease for a building, constructs Accounting Recognition for Asset Retirement Obligation – ASC 410 and ASC 842. This article explains the provisions See full list on corporatefinanceinstitute. ASC 410, Asset Retirement and Environmental Obligations, defines an ARO as In August 2018, the Public Sector Accounting Board (“PSAB”) issued the new PS 3280 Asset Retirement Obligations (“ARO”) to establish an accounting standard for public sector entities that addresses the accounting and reporting of legal Jul 4, 2023 · Asset Retirement Obligation is a legal and accounting requirement in which a company must make provisions for the retirement of a tangible long-lived asset to bring the asset back to its original condition after the business uses the asset. 8 Disclosure. They must be recognized according to GAAP. They accrete (increase over time) at the company's credit-adjusted risk-free rate. 21). 8. THE STATEMENT REQUIRES ENTITIES TO RECOGNIZE asset retirement duties at their May 13, 2020 · This video illustrates how to account for decommissioning costs (a. Optio …. The summary is available here in English. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition When the ARO-enabled asset is retired, the associated asset retirement obligation is settled (reduce the remaining ARO liability and record an ARO Settlement for the amount actually incurred. The starting probability could to reduced based on available evidence. KPMG’s perspective. ASC 410-20 describes standards for the recognition and measurement of an asset retirement obligation (ARO), which is a legal obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, and/or normal operation of that asset. FASB and IFRS in the US have guidelines for identifying and accounting for asset retirement obligations. Access the FASB Accounting Standards Codification at the FASB website (www. Based on this view, the starting point shouldn must an premise of 100% probability the forced. GASB 83 does not apply to: Obligations that arise solely from a plan to sell or otherwise dispose of a tangible capital asset. FIN 47, Conditional Asset Retirement Obligations, effective in the fourth quarter of 2005 for most utilities, will provide new challenges. The statement applies to retirement obligations to tangible long-lived assets. The report should explain the relationship between the actuarial present value of promised retirement benefits and the net assets available for benefits, and the policy for the funding of promised benefits. All of the above are true. This publication is designed to assist professionals in understanding the accounting for asset retirement obligations. 7 is applied when adjusting cash flow obligations for uncertainty. Jun 30, 2022 · 3. 143, Accounting for Asset Retirement Obligations— which was seven years in the making—shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it—even if that is far in advance of the asset’s planned retirement. k. 143, Accounting for Asset Retirement Obligations--which was seven years in the making--shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it--even if that is far in advance of the asset's planned retirement. We have updated our Financial reporting developments publication on asset retirement obligations to further clarify and enhance our interpretative guidance. Apr 27, 2022 · Asset Retirement Obligations. ASC 410-20 details the types of transactions subject to the asset retirement obligation guidance. The interest accrued on the asset retirement obligation is recorded as interest expense. FAS 143: Accounting for Asset Retirement Obligations. The specific seven digit Codification citation (xxx-xx-xx) for the recognition of stock compensation. Asset Retirement Obligations ( ARO) are commonly associated with industries such as oil and gas, mining, waste disposal, or nuclear energy. This Subtopic also addresses the accounting for an environmental remediation liability that results from Discussions of some of the most complex topics in financial reporting. Explain how these expenses are derived. Figure PPE 3-1 highlights accounting considerations over the life of an ARO; each phase is discussed in more detail in the sections that follow. Docket No. How do we calculate the gains or loss on settlement of ARO (5pts)? The guidance for asset retirement obligations prescribes the accounting for obligations related to the retirement of long-lived tangible assets. Document Type: Order. ARO accounting is governed by accounting standards […] Accounting for asset retirement obligations (ARO) apply to both Full Cost and Successful Efforts companies. 41- or FASB ASC 41. By the end of this course Jun 5, 2023 · Asset retirement obligations are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of such assets. Menu Accounting and reporting An asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset. Ear­lier adop­tion is per­mit­ted. Study with Quizlet and memorize flashcards containing terms like If a company incurs disposition obligations as a result of acquiring an asset, When selling property, plant and equipment for cash, Which of the following does NOT pertain to accounting for asset retirement obligations and more. It ap­plies to fis­cal years be­gin­ning on or af­ter April 1, 2021. us Financial statement presentation guide 11. , Three groups that participate in the process of establishing GAAP are users, preparers, and auditors. EXECUTIVE SUMMARY INTO PROVIDE BUSINESSES WITH GUIDANCE ON WHEN and how to distinguish a accountability forward asset retirement obligations, FASB delivered Statement no. Which of the following does not pertain to accounting for asset retirement obligations? A) They accrete (increase over time) at the company's credit-adjusted risk-free rate. Legal obligations associated with the retirement Journalize entries for discarding of plant assets. In 2001, the Financial Accounting Standards Board (FASB) issued a Statement of Financial Accounting Standards No. In the oil and gas sector, this often encompasses the removal or clean-up of equipment and hazardous materials at the end of an asset’s useful life. Chapter 4 — Accounting for Asset Retirement Obligations 4. ASC 980-410 requires a regulated utility to recognize plant decommissioning costs and other asset retirement obligations (AROs) in accordance with the general guidance in ASC 410. 2 Scope of the ARO guidance. Overview. fasb. us PP&E and other assets guide. 143 in June 2001 that requires public companies to recognize the fair value of Nov 11, 2021 · An asset retirement obligation ( ARO) represents the legal commitment to remove certain improvements or modifications to an asset at the end of the asset’s use. Nov 11, 2021 · If the obligation is related to environmental remediation and results from improper use of the asset, you are dealing with an environmental obligation under ASC 410-30. This section takes effect for fiscal years beginning on or after April 1, 2022, which means that reporting year ending Answer : 22. There are quite a few challenges along the way as these entities understand the underlying requirements and issues that must be addressed before New Sec­tion. ARC is subject to amortization. asset retirement obligations or AROs) under Canadian IFRS and ASPE. FASB Declare no. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of Apr 21, 2003 · The accounting for asset retirement obligations in this rule is consistent with the accounting and reporting requirements that jurisdictional entities will use in their general purpose financial statements provided to shareholders and the Securities Exchange Commission ( e. When a firm is finished utilizing a long-lived physical asset, the corporation must establish plans to retire the asset and restore it to its original state. In the United States, ARO accounting is Accounting for Asset Retirement or Restoration Obligation with the Adoption of PFRS 16, Leases Background In many cases, a lessee would enter into a lease agreement that requires the lessee to restore the leased asset back to its original condition (e. 1 Regulatory assets and liabilities related to asset retirement obligations. 3 Scope of ASC 410-20 4. The first entry is the initial recording of the asset retirement obligation. 7 Presentation 4. (5pts) b. View all / combine content. Jan 15, 2024 · An Asset Retirement Obligation (ARO) is a liability you must manage when handling long-lived physical assets. Jan 30, 2020 · Asset retirement obligation is a liability, considered a common legal requirement to return an asset to its old condition according to asset retirement obligation accounting IFRS IAS 37 and the Accounting Standards Codification Statement No. 2021 is about evenly split between onshore and offshore requirements. When retiring a plant asset from service, a company removes the asset’s cost and accumulated depreciation from its plant asset accounts. This news explains the provisions of Statement no Certain Asset Retirement Obligations. Generally, a lessee will incur an ARO if the conditions to return the asset in the original condition (apart from natural wear and tear) are included in the Apr 23, 2024 · Asset retirement obligations are a requirement in terms of law and accounting. [IAS 26. Mar 27, 2019 · In the above journal entry, the asset retirement obligation is a obligation statement which rise over time on account off unfolded of discount. Here's the problem Accounting for Asset Retirement Obligations The Company complies with FASB guidance for asset retirement obligations (“ARO”). Statement of Financial Accounting Concepts Number 7 is applied when adjusting cash flow obligations for uncertainty. This can include the dismantling, removal, or remediation of property to its original condition at Environmental obligations can arise from (1) the improper operation, retirement, or closing of a facility and (2) the current or former ownership of a facility at or near a contaminated site. Some areas, such as construction in process, capitalized software, long-lived asset impairment, and asset disposals, can be complex. The FASB ’s ASC 410 Asset Retirement and Environmental Obligations (ASC 410) discusses accounting for AROs. The accounting guidance in ASC 410-20 applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. The application automates the recognition and reporting of AROs and supports different accounting principles (for example, IFRS and U. , companies will separately account and report the liability for the Multiple Choice They accrete (increase over time) at the company's credit-adjusted risk-free rate. All of the other answer choices pertain to accounting for asset retirement obligations. 143, Accounting for Asset Retirement Obligations. This Interpretation clarifies that the term conditional asset retirement obligation as used in FASB Statement No. The Accounting Standards Board of Japan (ASBJ) has today released the Accounting Standard for Asset Retirement Obligations (Statement No. Applies to: Legal obligations, including obligations created by promissory estoppel, associated with the retirement of a tangible capital asset resulting from its acquisition, construction, development, or normal use. Many public sector entities are currently working through the various aspects of the implementation of the Asset Retirement Obligation standard. Asset retirement costs (ARC) are capitalized as part of a related long-lived asset. Apr 1, 2013 · This paper provides an analysis of accounting for asset retirement obligations before and after the issuance Statement of Financial Accounting Standards (SFAS) 143, Accounting for Asset Retirement Obligations (AROs) which amends SFAS 19, Financial Accounting and Reporting by Oil and Gas Producing Companies. Some professional judgement will need to be applied to determine what overhead costs can be included in the obligation. 143 (FAS 143), Accounting for Asset Retirement Obligations, requires an entity to recognize the fair value of a liability for legal obligations associated with the retirement of a tangible long-lived asset in the period in which it is incurred if a Exhibit 1 illustrates the result of these adjustments, assuming no accounting treatment for asset retirement obligations prior to adopting SFAS 143. A legal obligation is an obligation that a party is required to settle as a result of an existing or enacted law Jan 1, 2003 · Beginning in 2003, some calendar year-end companies will apply the provisions of SFAS 143, Accounting for Asset Retirement Obligations, which requires the recognition of a liability for certain obligations associated with the retirement of long-lived assets. Oct 8, 2023 · Accounting for Asset Retirement Obligations (ARO) is an important aspect of financial reporting for companies in various industries. ”. If, however, the liability occurred while the asset was being used as intended, you most likely have an ARO. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Nov 24, 2020 · Asset Retirement Obligation: An accounting rule established by Financial Accounting Standards Board Rule No. com Asset retirement obligations are initially recognized as a liability at fair value, with a corresponding asset retirement cost (ARC) recognized as part of the related long-lived asset. ASC 410, Asset Retirement and Environmental Obligations, defines an ARO as Norwalk, CT, December 7, 2016 —The Governmental Accounting Standards Board (GASB) today issued guidance for state and local governments addressing liabilities known as “asset retirement obligations. Asset retirement obligations can be associated with tangible capital assets Because of diverse practice in current accounting for asset retirement obligations, various industries and entities will be affected differently. 410-20 Asset Retirement Obligations. C: Statement of Financial Accounting Concepts Number 7 is applied when adjusting cash flow obligations for uncertainty. This Statement applies to all entities. The acquisition, construction, development Asset retirement obligation management in SAP S/4HANA Cloud helps you manage your asset retirement obligations (AROs) from an accounting point of view. Under ASC 410 guidelines if a company installs a physical asset, enter into a lease of a building or any other such installations that create an obligation for the company to remove these installations, it will record an ARO in its account books. g. This entry is a debit to fixed assets and a credit to the asset retirement obligation account (Liabilities). 19] Retirement benefit plan investments should be carried at fair value. The obligation is not recorded as a prior period adjustment, since the change results from a current period event. , remove any leasehold improvements) at the end of the lease term. This guidance affects the accounting for the decommissioning of the Company’s Palo Verde and Four Corners Stations and the method used to report the decommissioning obligation. Accounting guidelines for the asset retirement obligation (ARO) are covered in detail by ASC 410. This becomes especially pertinent when there is a foreseeable need to dismantle such structures before the expiration of a land lease. A liability for an asset retirement obligation (ARO) within the scope of this guidance may arise solely from. 27 April 2022. For marketable securities, fair value means market value. GASB 83 established accounting and financial reporting standards for certain asset retirement obligations (AROs). 1 min read. Account. 22 - Accounting for Accounting for Asset Retirement Obligations Status Issued: June 2001 Effective Date: For financial statements for fiscal years beginning after June 15, 2002 Affects: Replaces FAS 19, paragraph 37 Affected by: Paragraphs 2 and 12 amended by FAS 144, paragraph C18 Paragraphs 6, 7, and 9 deleted by FAS 157, paragraphs E23(a) and E23(c), respectively The Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. For example, Hassan Company would make the following journal entry when it disposed of a fully depreciated machine that cost $15,000 and had no salvage value: This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance on environmental obligations in ASC 410-30 and asset retirement obligations (AROs) in ASC 410-20. PS 3280 requires only overhead costs directly attributable to the legally required retirement activities to be included in the asset retirement obligation. ARO Gain Feb 20, 2002 · OED-DRAP. AFOREMENTIONED ASSERTION REQUIRES ENTITIES TO RECOGNIZE asset retirement debts at their the asset retirement obligation arises. Practice Question 22 When accounting for asset retirement obligations under ASPE, O Costs included as capital assets are both ARO-related costs resulting from the acquisition of the asset and its subsequent use in producing Inventory. Asset Retirement Obligations (ARO) Fact Sheet for Municipal Financial Officers. Nov 11, 2021 · Asset Retirement Obligations ( ARO) are commonly associated with industries such as oil and gas, mining, waste disposal, or nuclear energy. generation assets in some jurisdictions and the issuance of FASB 143, Accounting for Asset Retirement Obligations, have challenged industry members to rethink previous accounting and reporting methods. The guidance in this Subtopic applies to the following transactions and activities: a. Bureau(s): Wireline Competition. The difference between the asset retirement obligation liability and the amount actually incurred is to be recognized as either a gain or loss. The improper operation of a long-lived asset. Jun 30, 2022 · This chapter addresses common issues in accounting for asset retirement obligations (AROs), which are obligations associated with the retirement of a tangible long-lived asset. ASC 410-20 notes the following: This Subtopic establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. On the Radar briefly summarizes emerging issues and trends related to the accounting Nov 10, 2021 · An asset retirement obligation is the liability for the removal of property, equipment, or leasehold improvements at the end of the lease term. An asset retirement obligation (ARO) is a legally enforceable liability associated with the retirement of a tangible capital asset. No­vem­ber 2020. 5 Initial Measurement of AROs and ARCs 4. 143, Accounting for Asset Retirement Obligations (now part of ASC 410-20), refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may Mar 8, 2024 · Asset retirement obligations (AROs) play a pivotal role in the realm of accounting, particularly for companies engaged in activities that entail the creation of physical infrastructure. S. As a company or entity utilizing substantial infrastructure or equipment, you must consider the eventual cost of retiring these assets. 143 (Issued 3/05) Summary. Obligations associated with the preparation of a tangible capital The specific seven digit Codification citation (xxx-xx-xx) for the subsequent measurement of asset retirement obligations. We record depreciation expense and interest expense. Multiple Choice. An ARO is an estimate of future costs Jun 1, 2023 · Using publicly reported accounting data on asset retirement obligations and provisions, the present value of worldwide oil and gas decommissioning liability is estimated between $311 and $362 billion circa 2021. Description Dec 31, 2019 · Accounting for Asset Retirement Obligation (ARO) As per para 16 (c) of Ind AS 16, the cost of an item of property, plant and equipment includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a Dec 1, 2001 · FASB Statement no. The detailed accounting guidance for AROs is found in ASC 410-20. 18) and the Guidance on Accounting Standard for Asset Retirement Obligations (Guidance No. bq zl qf wb se fm bq vv ms ml