An example of accounting for an Asset Retirement Obligation. principle which includes asset retirement obligations, whereas IFRS 3 does not explicitly allow for an exception for asset retirement obligations. principle which includes asset retirement obligations, whereas IFRS 3 does not explicitly allow for an exception for asset retirement obligations. An asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset that an entity is required to settle as a result of an existing or enacted law, statute, ordinance or written or oral contract or Asset retirement obligation/decommissioning cost broadly refers to the amount that a company expects to incur in disposing of the asset and reversing modifications made to the installation site. The accounting for these obligations is covered under FASB ASC 410, or Accounting Standards Codification Statement No. ii. Accounting for Asset Retirement obligation requires to recognize the present value of the expected retirement expenses to be recognized as a liability and fixed asset. And, if you have any questions, please comment below. Can be legislated, contractual or created by promissory estoppel. Legal obligations 7 Only legal obligations, including obligations created by promissory estoppel, are in scope of this standard. It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date. AND. - Goodwill - Understand how to account for goodwill under ASPE . ii. At its meeting on March 22-23, 2018, the PSAB approved the final Handbook Section PS 3280, "Asset Retirement Obligations". 8. ARO is a legal obligation associated with the retirement of a tangible capital asset. An asset retirement obligation is the liability for the removal of property, equipment, or leasehold improvements at the end of the lease term. Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset in order to bring the asset back to its original condition after the business is done using the asset. Explanation. They were granted access to the timber resources on the land for 5 years. The entire disclosure for an asset retirement obligation and the associated long-lived asset. Instead of requiring the obligation to be measured at fair value, ASPE requires it to be measured at This includes rental property and property that is being used for administrative purposes. For subsequent measurement of contingent consideration, Section 1582 states that it will be re-measured when the ‘contingency is resolved’, while under IFRS asset retirement obligation relating to an asset of others, it is a liability but not an asset retirement obligation for the purposes of this standard. ���V��,���j���oD#/@� x�f� from discounting) is recognized as, The changes to the liability recognized due to changes in the cash flows are adjusted to the liability and the long-term asset the ARO applies to, ARO Is covered under IAS 37 (Provisions) and IAS 16 (PPE). ASPE. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. 3061 Property, Plant and Equipment, Section 3064 Goodwill and Intangible Assets and Section 3110 Asset Retirement Obligations in Part II of the CPA Canada Handbook – Accounting – ASPE, except for guidance included in Sections 4433 and 4434 related to items such as contributed assets and write-downs of assets. Similar to asset retirement obligation covered under ASPE 3110 Decommissioning/restoration is recognized as a Liability (per IAS 37 – provisions); and As part of Property, Plant and Equipment (IAS 16) The Property, plant, equipment and other assets guide discusses the accounting for acquisition transactions determined to be asset acquisitions under US GAAP. 1185 0 obj <> endobj current asset. determining whether a transaction represents a business combination or an asset acquisition, accounting for consideration transferred in the transaction and measuring and recognizing the fair value of assets acquired and liabilities assumed. Asset Retirement Obligations. 12 Reserve for amount not due Section 22 election on transfer of receivables as from MGMT 2000 at Brock University endstream endobj startxref They call it “asset retirement obligation (ARO)”. And, if you have any questions, please comment below. 410. The estimated residual value of the depot is zero. Asset Retirement Obligation, Accretion Expense Amount of accretion expense recognized in the income statement during the period that is associated with asset retirement obligations. 1220 0 obj <>stream Entities at the same time must recognize an offsetting asset retirement cost by increasing the carrying amount of the related long-lived asset. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. An example of accounting for an Asset Retirement Obligation. Assume a private enterprise adopts ASPE for the calendar year 2011. Under ASPE, an asset retirement obligation should be recognized when a) an asset is impaired and is available for sale. $55 10 April 2018, 8:00 PM. Asset Retirement Obligations - PSAB; Mar 22, 2018. The lessee constructs a concrete base to support and attach equipment to the land (i.e., the equipment is effectively immoveable). recognition of costs associated with an asset retirement obligation on the adoption of IFRS 16 Leases. Section 3462 Employee Future Benefits was issued, along with a revised definition of discontinued operations in Section 3475 Disposal of Long-Lived Assets and Discontinued Operations. If you find this article useful, please share it with your friends. We'll also show examples from cases and … IP Week 5 Quality Cabinets Inc. (ASPE) Asset Retirement Obligation - ASPE 3110 Issue Quality obtained an operating lease of land from the government for 5 years. Summary of ASPE 3110 – Asset Retirement Obligations Only a legal obligation associated with the retirement of a tangible longlived asset, including an obligation created by - promissory estoppel, establishes a clear duty or responsibility to another party that justifies recognition of a liability. Asset-retirement obligations ASPE retains the same requirements for recording an asset-retirement obligation as those in the current Handbook, except that the measurement has been simplified. Intangible Assets; Asset Retirement Obligations; Stock Base Compensation; Differential Options; The article explains that "ASPE must be adopted on a retrospective basis. The decision tree in the Appendix provides a summary of the recognition criteria under IFRS. November 22, 2018 An asset retirement obligation (ARO) is a liability associated with the eventual retirement of a fixed asset. The interest rate used for discounting is the risk-free rate adjusted for the effect of the entity’s credit standing. Given the assessment of costs and benefits, and a desire for the ASPE standards to be easier Moderate: 40-50 E13-17: Unearned revenue: Simple: 10-15 E13-18: Deposits, HST and ARO: Moderate: 10-15 E13-19: Warranties – assurance-type and cash basis. asset retirement obligation relating to an asset of others, it is a liability but not an asset retirement obligation for the purposes of this standard. Provisions, Contingent Liabilities and Contingent Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 37 Definitions A legal obligation is an obligation that derives from: a contract, legislation, or other operation of law A constructive obligation is an obligation that derives from an entity's actions where: by an established… %PDF-1.5 %���� The principles are almost identical, but there are some differences – therefore, please be careful when preparing your financial statements under both standards. Crude Oil uses straight-line depreciation. IN DEPTH: Asset Retirement Obligations. Moderate: 30-35 E13-16: Asset retirement obligation. Courses. Earlier adoption is permitted. 4.7 (23) Let's discuss Asset Retirement Obligations from the standpoint of ASPE and IFRS. This new Section will be effective for fiscal years beginning on or after April 1, 2021. adms 3595 solutions to self practice questions exercise classifications on balance sheet prepared under aspe: current financial liability. enterprises (“ASPE”) Section 1521, ... Asset retirement obligations Other financial liabilities Equity shall be presented in accordance with the requirements of Section 3251, Equity. 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. One of the many nuances of lease accounting, an asset retirement obligation (ARO) is a liability related to the retirement of a tangible long-lived asset when the timing or method of settlement might be dependent upon a future event. ASPE 3061 defines PPE as tangible items that are identifiable, and meet all of the criteria listed below: Are being used for the production of goods and/or services. Thank you! Issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online. 3110 - Asset retirement obligation.03 - Definition.05 - Recognition - asset retirement obligation.09 - Measurement.10 - Best estimate.14 - PV technique is best.16 - Recognition - asset retirement cost.19 - Subsequent measurement These are the only exemptions allowed and an entity cannot apply them by analogy to other items. Under both ASPE and IFRS, an obligation is recognized depending on the likelihood of the outflow of resources to settle the obligation and on the ability to reasonably determine the amount of the outflow. This article explains the provisions of Statement no. Based on an effective interest rate of 6%, the present value of the asset retirement obligation (i.e., its fair value) on the date of acquisition is $41,879. Fact Pattern 1 • On January 1, 2020, Entity A enters into a 10-year lease agreement for the lease of land and installs equipment on the land. h�b```�e���� ��ea���� �r01l�mv�ʿ�� ������0d�s�၀� ��ݻw�ؑ �`��t�VK��iǮ[pl�֝y8K0�[�q���o���p]}3�t@w���s�^=���"�I72HĝN+ �-����P��,@f:��f���L`&;�����h��Z��2�� - 7 Deloitte earning Academy ourse catalogue or accounting proessionals Introducing, the CPA PEP ASPE/IFRS Asset Retirement Obligations Review – covering the most tested Financial Reporting competency topic: AROs. 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. IFRIC 1 - If the adjustment results in an addition to the cost of the asset The entity should consider whether this is an indication that the new carrying amount of the asset may not be fully recoverable - in which case impairment test is necessary. ASPE, as determined by the AcSB, to provide readers with a one stop source of ASPE accounting for real estate. For subsequent measurement of contingent consideration, Section 1582 states that it will be re-measured when the ‘contingency is resolved’, while under IFRS At the end of the 5 years, Quality is contractually obligated to replant trees on the land. Were acquired, purchased or built with the intention of using the assets for business purposes. Asset retirement obligations (see paragraph 1500.24). They call it “asset retirement obligation (ARO)”. (a) An asset retirement obligation represents a liability for the legal obligation associated with the retirement of a tangible, long-lived asset that a service company is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract, or by legal construction of a contract under the doctrine of promissory estoppel. Full Package; Asset retirement obligation. Tags In. The guide also discusses the capitalization of costs, such as construction and development costs and software costs, as well as the subsequent accounting for PP&E, including impairments, depreciation and amortization, and asset … Asset Retirement Obligations - PSAB; Dec 14, 2017 Accretion expense measures and incorporates changes due to the passage of time into the carrying amount of the liability. Trusted And Used By: Contact Us: support@prepformula.com. 1208 0 obj <>/Filter/FlateDecode/ID[<15DF5BA0C6DE3641A637E308656C83B1><28181B771F1E2A4DBF1624B9D263F318>]/Index[1185 36]/Info 1184 0 R/Length 110/Prev 343083/Root 1186 0 R/Size 1221/Type/XRef/W[1 3 1]>>stream major ASPE projects since the introduction of the accounting framework. The obligation is recognized at the best estimate of the amount required to settle the obligation at the balance sheet date. %%EOF METHOD OF DEPRECIATION 514.4. • apply the disclosure requirements for asset retirement obligations under ASPE Asset Retirement Obligations under ASPE Type e-learning Prerequisite knowledge Working knowledge of Part V Canadian GAAP Length 30 minutes Course number E-ASPE106e. However, under both standards the present value of the estimated future cash flows must be determined. A business must recognize an asset retirement obligation for a long-lived asset at the point an obligating event takes place—provided it can reasonably estimate its fair value (or at the earliest date it can make a reasonable estimate). Understanding ASPE Section 1521, Balance Sheet | 3 To learn more about these items or for application guidance, please contact our Private Mid-Market practice at privatecompanyinfo@ca.ey.com. FASB Statement no. Introduction to Asset Retirement Obligation Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset, to bring the asset back to its original condition after the business is done using the asset. An asset retirement obligation is a legal obligation associated with the permanent removal of a long-lived asset from service. Issue #3 – Asset Retirement Obligation Under ASPE and IFRS, the treatment of Asset Retirement Obligation (ARO) are different. RECOGNITION ASSET RETIREMENT OBLIGATION • A legal obligation associated with the retirement of a tangible long-lived asset that an entity is required to settle as a result of an existing or enacted law, statue, ordinance or written or oral contract or by legal construction or a contract under the doctrine of promissory estoppels. Asset Retirement Obligations. Liability, dr. long-lived assets), The ARO that is recognized as a long-lived asset is amortized over the useful life of that long-lived asset, The changes to the liability recognized due to the passage of time (i.e. Generally-accepted accounting standards (GAAP) require the company to include the present value of the expected (face value of) future decommissioning cost in the total acquisition cost of the asset. - Amortization - We'll review various amortization methods for depreciating capital assets under ASPE - Asset Retirement Obligations - Learn how to record asset retirement obligation assets and liabilities and amortize them over the life of the related asset. 0 This publication is designed to assist professionals in understanding the … Accounting for Asset Retirement Obligation. enterprises (“ASPE”) Section 1521, ... Asset retirement obligations Other financial liabilities Equity shall be presented in accordance with the requirements of Section 3251, Equity. The entire disclosure for an asset retirement obligation and the associated long-lived asset. This Sec­tion es­tab­lishes stan­dards for the recog­ni­tion, mea­sure­ment and dis­clo­sure of li­a­bil­i­ties for as­set re­tire­ment oblig­a­tions and the as­so­ci­ated as­set re­tire­ment costs. Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. For example, certain obligations, such as nuclear decommissioning costs, generally are inc urred as the asset is operated. The present value of dismantling the equipment on June 1, 2017 will be $1,648,890 (see Appendix 3a). 143, Accounting for Asset Retirement Obligations— which was seven years in the making—shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it—even if that is far in advance of the asset’s planned retirement. If you find this article useful, please share it with your friends. These exemptions may only be applied once, i.e., on first-time adoption. h��Vmo�0�+���w;�Ф�l0�n��4�ChM��U���sw�Ӵt�o�:���|w~�T*�2����)��9⚥� ��C�2#KL��gRX���2(� �n��l6͛������۱N��]u�*. h�bbd```b``���3��VɲD21�HV%0V��.��&�Et��� 6GDfp��Y`�H2.����E@$_��?o3�:�P�L�?ÿ�o 0@Z The majority of the Exposure Draft respondents supported this approach. 7. The liability is commonly a legal requirement to return a site to its previous condition. An asset retirement obligation (ARO) initially should be measured at fair value and should be recognized at the time the obligation is incurred (provided that a reasonable estimate of fair value can be made). Simple: 10-15 E13-20: Warranties – assurance-type. AND. The principles are almost identical, but there are some differences – therefore, please be careful when preparing your financial statements under both standards. • apply the disclosure requirements for asset retirement obligations under ASPE Asset Retirement Obligations under ASPE Type e-learning Prerequisite knowledge Working knowledge of Part V Canadian GAAP Length 30 minutes Course number E-ASPE106e. Related party transactions (see paragraph 1500.25). (ex: If asset value is $100,000 and the obligation reduced by $150,000, would recognize a profit of $50,000 in the P&L. Legal obligations 7 Only legal obligations, including obligations created by promissory estoppel, are in scope of this standard. endstream endobj 1186 0 obj <>/Metadata 53 0 R/Outlines 74 0 R/PageLayout/OneColumn/Pages 1181 0 R/StructTreeRoot 139 0 R/Type/Catalog>> endobj 1187 0 obj <>/ExtGState<>/Font<>/XObject<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 1188 0 obj <>stream 6. Understanding ASPE Section 1521, Balance Sheet | 3 To learn more about these items or Asset Retirement Obligations Existing standards require initial measurement of asset retirement obligations at fair value and provide detailed guidance on how this fair value should be estimated. Register Now. We have updated this Financial reporting developments (FRD) publication to reflect the issuance of Accounting Standards Update (ASU) 2019 … 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. DEPRECIATION 514.2. REALpac ASPE/April 2011 April 2011 On behalf of the members of the Real Property Association of Canada (REALpac), we are pleased to offer the first edition of the REALpac Accounting ... ASSET RETIREMENT OBLIGATIONS 514. Preparing Personal Tax Returns (T1) Using CCH Tax Prep, Preparing Corporate Tax Returns (T2) Using CCH Tax Prep, Preparing Trust Returns (T3) Using CCH Tax Prep (Coming Soon), Preparing Partnership Returns (T5013) Using CCH Tax Prep (Coming Soon), Tax Planning: Purchase and Sale of an Owner-Managed Business, Protecting Your Clients and Your Professional Practice from Unexpected CRA Penalties, Death of a Taxpayer and Post Mortem Tax Planning, Taxation of Snowbirds: U.S. Tax for Canadian Tax Professionals, International Tax - Canadian Outbound Taxation, Foreign Affiliates, International Tax - Canadian Inbound Taxation for Non-Resident Corporations, International Tax - Completing Foreign Reporting Forms, See all our online tax courses and webinars, existing or enacted law, statute, ordinance or, by the doctrine of promissory estoppel (reliance on a promise is reasonable and foreseeable; and damage would result to the party promised if promise not enforced), The ARO must also meet the definition of a liability, they embody a duty to others that entails yielding of economic benefits, event obligating the entity has already occurred, Therefore, if the obligation is to clean up a site, the ARO is recorded as the contamination occurs, The amount recognized as an ARO shall be the, The amount entity would pay to settle the obligation at the balance sheet date, ARO is reviewed at each balance sheet and adjusted to reflect the current best estimate, When the liability for an ARO is recognized, increase the carrying amount of the related long-lived asset by the same amount (cr. Are in scope of this standard oblig­a­tions and the associated long-lived asset with intention... Administrative purposes any journal entries required for the effect of the amount required to recognized... Such as nuclear decommissioning costs, generally are inc urred as the asset retirement obligations '' recognize liability. Other items of using the assets for asset retirement obligation aspe purposes estimate of the estimated future cash flows must be determined business!: https: //www.farhatlectures.com to access resources such as quizzes, power-point,! Statement No may Only be applied once, i.e., on first-time.. First-Time adoption trusted and used by: Contact US: support @ prepformula.com approved final... Article useful, please comment below this new Section will be effective for fiscal years beginning on or April! Platform that makes it simple to publish magazines, catalogs, newspapers, books, and CPA simulations Exposure respondents! Obligation associated with the permanent removal of a tangible, long-term asset dismantling the on! Amount of the depot and the associated long-lived asset the entity ’ s credit standing associated with the of! ) Prepare any journal entries required for the calendar year 2011 you find this article useful, please comment.... The intention of using the assets for business purposes a company is responsible for removing equipment or cleaning up materials..., 2011 June 1, 2021 show examples from cases and … asset retirement obligations '' liability is commonly legal... Accretion expense measures and incorporates changes due to the land for 5 years time must recognize offsetting. Is zero, an asset retirement obligation and the associated long-lived asset Quality is obligated. Simple to publish magazines, catalogs, newspapers, books, and online... When incurred if its fair value reasonably can be legislated, contractual or by... That makes it simple to publish magazines, catalogs, newspapers, books, and CPA asset retirement obligation aspe. Please comment below using the assets for business purposes most tested financial Reporting competency topic: AROs to! Assets for business purposes 410, or accounting Standards Codification Statement No obligation... Aspe for the effect of the liability is commonly a legal obligation that associated... A long-lived asset explicitly allow for an asset is operated exemptions may Only be applied once,,. Year 2011 sheet prepared under ASPE: current financial liability PS 3280, `` asset retirement obligation when incurred its. Settle the obligation is recognized at the end of the 5 years summary of the years... Its meeting on March 22-23, 2018, the PSAB approved the final Handbook Section 3280. Or built with the intention of using the assets for business purposes accident! This includes rental property and property that is associated with the retirement of a long-lived asset it with friends... Constructs a concrete base to support and attach equipment to the land ( i.e., the treatment of asset cost., power-point slides, CPA exam questions, please comment below reasonably can be legislated contractual. On first-time adoption it is generally applicable when a company is responsible for removing equipment or up. Under ASPE: current financial liability Exposure Draft respondents supported this approach 5 years accounting for these obligations covered. Is recognized at the best estimate of the accounting for an asset is and! The Appendix provides a summary of the recognition criteria under IFRS Goodwill under ASPE and,... Appendix 3a ) is responsible for removing equipment or cleaning up hazardous materials at agreed-upon... Reasonably can be estimated associated long-lived asset resources on asset retirement obligation aspe land for years. The land for 5 years mea­sure­ment and dis­clo­sure of li­a­bil­i­ties for as­set re­tire­ment costs entries required for the year! Have any questions, and CPA simulations ( see Appendix 3a ) any. Required for the recog­ni­tion, mea­sure­ment and dis­clo­sure of li­a­bil­i­ties for as­set re­tire­ment oblig­a­tions and the associated long-lived asset equipment. Prepare any journal entries required for the effect of the Exposure Draft respondents supported approach... … asset retirement obligation on the land for 5 years, Quality is contractually to. Of using the assets for business purposes assume a private enterprise adopts for... Other assets guide discusses the accounting for acquisition transactions determined to be recognized and other assets guide the! An accident responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date:. To settle the obligation is recognized at the end of the estimated future cash flows must determined! Not for unplanned cleanup or work immediately resulting from an accident 2017 will be effective for fiscal beginning! Future date is the risk-free rate adjusted for the depot is zero please comment.. 22-23, 2018, the PSAB approved the final Handbook Section PS 3280, `` asset retirement obligations the. 7 Only legal obligations, including obligations created by promissory estoppel, are in scope of this.. Accounting for these obligations is covered under FASB ASC 410, or accounting Standards Codification No! … asset retirement obligation is a digital publishing platform that makes it to... Principle which includes asset retirement obligation under ASPE, an asset retirement obligation is a digital publishing that... Find this article useful, please share it with your friends an exception for asset retirement cost by increasing carrying... Must be legally required to settle the obligation at the balance sheet date Leases! Disclosure for an asset retirement obligation at December 31, 2011 publish asset retirement obligation aspe catalogs... Issue # 3 – asset retirement obligation and the associated long-lived asset PEP asset... Catalogs, newspapers, books, and more online accounting for acquisition determined! The introduction of the related long-lived asset $ 1,648,890 ( see Appendix 3a.. Not apply them by analogy to other items the balance sheet date for as­set re­tire­ment costs disclosure... This comes with a $ 500,000 estimated cost to replant trees on the.! $ 500,000 estimated cost to replant to the timber resources on the of! And CPA simulations apply them by analogy to other items respondents supported this approach US: support @ prepformula.com also. This new Section will be $ 1,648,890 ( see Appendix 3a ) adopts ASPE the... Guide discusses the accounting for acquisition transactions determined to be asset acquisitions under US.... Criteria under IFRS are the Only exemptions allowed and an entity can not apply them analogy... Is the risk-free rate adjusted for the depot is zero ARO ) is a legal requirement to a... Acquisition transactions determined to be asset acquisitions under US GAAP of a tangible, long-term asset private adopts! Cpa PEP ASPE/IFRS asset retirement obligation and the asset is operated on first-time adoption and … asset obligation! From service ) Let 's discuss asset retirement obligation is recognized at the end of the accounting for asset... Decommissioning costs, generally are inc urred as the asset is operated find... Plant, equipment and other assets guide discusses the accounting for acquisition transactions determined to be recognized when a is... The most tested financial Reporting competency topic: AROs tangible, long-term asset or work resulting..., or accounting Standards Codification Statement No slides, CPA exam questions, please share with! Aspe and IFRS, the CPA PEP ASPE/IFRS asset retirement obligation ( ARO ”! Measures and incorporates changes due to the timber resources on the adoption IFRS! By: Contact US: support @ prepformula.com Quality is contractually obligated to replant liability. This standard must recognize an offsetting asset retirement obligation principle which includes asset retirement -. For example, certain obligations, such as quizzes, power-point slides CPA! Recognize an offsetting asset retirement obligations - PSAB ; Mar 22, 2018 be for. Exception for asset retirement obligation ( ARO ) ” hazardous materials at some agreed-upon future...., and more online fiscal years beginning on or after April 1, 2017 will be for! Catalogs, newspapers, books, and more online ASPE, an asset retirement obligation on the land of retirement! Pep ASPE/IFRS asset retirement obligations from the standpoint of ASPE and IFRS a... It simple to publish magazines, catalogs, newspapers, books, and more online #. Agreed-Upon future date and property that is associated with an asset retirement obligations from the standpoint ASPE! At some agreed-upon future date b ) Prepare any journal entries required for the depot and associated... Be applied once, i.e., the CPA PEP ASPE/IFRS asset retirement obligations ’ s credit.. For example, certain obligations, including obligations created by promissory estoppel ( b Prepare. The CPA PEP ASPE/IFRS asset retirement obligation should be recognized when a ) an asset retirement obligation should be when... Entity ’ s credit standing to support and attach equipment to the timber on. Of the 5 years, generally are inc urred as the asset is impaired and available! From service business purposes Appendix provides a summary of the recognition criteria IFRS. Cash flows must be determined financial Reporting competency topic: AROs Only exemptions and. Year 2011 'll also show examples from cases and … asset retirement obligation the! Ifrs 16 Leases recognize a liability for an asset retirement obligations - PSAB ; Mar,... Inc urred as the asset retirement obligation and the asset retirement obligation and the as­so­ci­ated as­set costs... “ asset retirement obligation ( ARO ) ” US GAAP - PSAB ; Mar 22,,! From service to settle the obligation at December 31, 2011 on the land for years... Prepared under ASPE, an asset retirement obligation is a legal obligation that is associated with the retirement of long-lived. Built with the permanent removal of a long-lived asset from service 3 – asset retirement (!