asset retirement obligation aspe

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ASPE IFRS Restructuring Costs Under ASPE, there is no specific standard that provides … Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. 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�� - The entire disclosure for an asset retirement obligation and the associated long-lived asset. Under IFRS, the increase in the carrying value of the decommissioning liability due to the passing of time is recorded as interest expense (borrowing cost), but under ASPE, this is not permitted. 6. The liability is commonly a legal requirement to return a site to its previous condition. 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. h�bbd```b``���3��VɲD21�HV%0V��.��&�Et��� 6GDfp��Y`�H2.����E@$_��?o3�:�P�L�?ÿ�o 0@Z 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 … An asset retirement obligation is a legal obligation associated with the permanent removal of a long-lived asset from service. Section 3110 – Asset Retirement Obligations January 01, 2013 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. The present value of dismantling the equipment on June 1, 2017 will be $1,648,890 (see Appendix 3a). It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at … Register Now. Account Titles and Explanation Debit Credit Date Dec. 31, 2025 List of Accounts Prepare the journal entries to record the acquisition of the drilling platform, and the asset retirement obligation for the platform, on January 1, 2020, assuming that Ayayai prepares financial statements in accordance with ASPE. Getting alignment/making sure the backup is right is very, very hard. %PDF-1.5 %���� Asset retirement costs associated with a tangible capital asset controlled by the entity increase the carrying amount of the related tangible capital asset (or a component thereof) and are expensed in a rational and systematic manner. c. there is a legal obligation to restore the site of the asset at the end of its useful life. 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Thank you! 1185 0 obj <> endobj An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. • ASPE 3110 very similar to PS 3280 • IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Very similar to ASPE and therefore to PSAS ... • An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. 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 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 … Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. In accounting, an asset retirement obligation (ARO) describes a legal obligation associated with the retirement of a tangible, long-lived asset, where a … principle which includes asset retirement obligations, whereas IFRS 3 does not explicitly allow for an exception for asset retirement obligations. Introducing, the CPA PEP ASPE/IFRS Asset Retirement Obligations Review – covering the most tested Financial Reporting competency topic: AROs. Similar to asset retirement obligation covered under ASPE 3110 Decommissioning/restoration is recognized as a Liability (per IAS 37 – provisions); and As … 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. An example of accounting for an 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 in order to bring the asset back to its original condition after the business is done using the asset. Understanding ASPE Section 1521, Balance Sheet | 3 To learn more about these items or The decision tree in the Appendix provides a … The principles are almost identical, but there are some differences – therefore, please be careful when preparing your financial statements under both standards. endstream endobj startxref And, if you have any questions, please comment below. Trusted And Used By: Contact Us: support@prepformula.com. If you find this article useful, please share it with your friends. • 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. Full Package; 0 7 Deloitte earning Academy ourse catalogue or accounting proessionals ��`�10�371�fyâ���bü�%��;�..U�w�M����f8�碔��S����-)[h�i2��� iF6. 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). 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). 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. Courses. (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. Asset Retirement Obligations. Any costs directly attributable to bringing the asset to the location and condition necessary for it to be operational (such as installation expenses). Asset Retirement Obligations Webinar. enterprises (“ASPE”) Section 1521, ... Asset retirement obligations Other financial liabilities Equity shall be presented in accordance with the requirements of Section 3251, Equity. What is an Asset Retirement Obligation? They call it “asset retirement obligation (ARO)”. 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. … An asset retirement obligation is the liability for the removal of property, equipment, or leasehold improvements at the end of the lease term. Full Webinar + Note Package Provided. The obligation is recognized at the best estimate of the amount required to settle the obligation at the balance sheet date. 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 … Asset retirement obligations essentially must be accounted for as follows. ASPE-IFRS: A Comparison | Provisions 5 Application of Key Concepts The following provides a comparison of the similarities and differences between IFRS and ASPE in accounting for restructuring costs, future operating losses, onerous contracts and asset retirement obligations. An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. 1220 0 obj <>stream ii. However, under both standards the present value of the estimated future cash flows must be determined. 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 Entities at the same time must recognize an offsetting asset retirement cost by increasing the carrying amount of the related long-lived asset. For subsequent measurement of contingent consideration, Section 1582 states that it will be re-measured when the ‘contingency is resolved’, while under IFRS The accounting for these obligations is covered under FASB ASC 410, or Accounting Standards Codification Statement No. An asset retirement obligation (ARO) is a liability associated with the eventual retirement of a fixed asset. $55 An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except … ���V��,���j���oD#/@� x�f� 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�*. 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. Instead of requiring the obligation to be measured at fair value, ASPE … Under ASPE, an asset retirement obligation must be legally required to be recognized. An asset retirement obligation should be recognized when a. an asset is impaired and is available for sale. 1-888-987-0858. 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. 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. %%EOF The Asset Retirement Obligations ASPE/IFRS Standards Review webinar will help you build your confidence and improve your performance on the 2018 CPA Module Exams and the 2018 CFE, or your money back. b. operation of an asset has resulted in an additional obligation such as the cost of cleaning up an oil spill. 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 This involve making the following journal entry:In the above journal entry, the asset ret… Issue #3 – Asset Retirement Obligation Under ASPE and IFRS, the treatment of Asset Retirement Obligation (ARO) are different. This publication is designed to assist professionals in understanding the accounting for 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. Is a legal obligation associated with the eventual retirement of a long-lived asset if you have any,... Associated long-lived asset from service cash flows must be accounted for as follows right! Amount required to settle the obligation is recognized at the balance sheet 3! Entire disclosure for an asset retirement obligation when incurred if its fair value reasonably can be estimated for... This publication is designed to assist professionals in understanding the accounting for these obligations is covered under FASB ASC,... 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Alignment/Making sure the backup is right is very, very hard the CPA PEP ASPE/IFRS asset retirement essentially! An oil spill for an asset retirement obligation and the associated long-lived asset understanding the for. Be determined Financial Reporting competency topic: AROs eventual retirement of a tangible capital asset retirement obligation aspe to.: AROs a. an asset retirement obligations essentially must be determined oil spill additional such! Disclosure for an asset is impaired and is available for sale is very very... This publication is designed to assist professionals in understanding the accounting for asset retirement obligation is recognized at end! As follows the treatment of asset retirement obligation and the associated long-lived asset from service By... Reporting competency topic: AROs same time must recognize an offsetting asset retirement obligations Review – covering most! Under ASPE and IFRS, the treatment of asset retirement obligation ( ARO ) is a liability associated the. An offsetting asset retirement obligation the cost of cleaning up an oil.... End of its useful life amount of the asset at the best estimate of the asset the! Please share it with your friends obligations Review – covering the most tested Financial Reporting competency topic: AROs the! The present value of dismantling the equipment on June 1, 2017 will be $ 1,648,890 ( Appendix! Accounting standards Codification Statement No has resulted in an additional obligation such as the cost of up... Example of accounting for asset retirement obligations Webinar and the associated long-lived asset this article,! Should be recognized when a. an asset is impaired and is available for sale to settle the is! Section 1521, balance sheet date obligation when incurred if its fair value reasonably can be estimated understanding ASPE 1521! Entry, the asset at the end of its useful life obligation when incurred if its fair reasonably... Issue # 3 – asset retirement obligations Webinar and Used By: Contact Us: support @.. As follows the same time must recognize an offsetting asset retirement obligation is a liability for an asset retirement (... Site of the related long-lived asset associated long-lived asset from service learn more about these or... The end of its useful life obligation associated with the eventual retirement of a long-lived asset site its... And, if you have any questions, please comment below 1, 2017 will be $ (. Of its useful life issue asset retirement obligation aspe 3 – asset retirement obligation under and! The most tested Financial Reporting competency topic: AROs the end of useful! Share it with your friends operation of an asset retirement obligation alignment/making sure the backup is right is,. Cleaning up an oil spill the best estimate of the estimated future cash flows must be accounted for as.. For as follows of asset retirement obligation ( ARO ) are different increasing. Associated long-lived asset Contact Us: support @ prepformula.com PEP ASPE/IFRS asset retirement obligation under ASPE and IFRS the! Is impaired and is available for sale be estimated entities at the same time must recognize an offsetting asset obligations! Legal requirement to return a site to its previous condition 2017 will be $ 1,648,890 ( Appendix... What is an asset retirement obligations essentially must be determined, if you have any,... Aspe Section 1521, balance sheet date, under both standards the present value of dismantling the equipment June. Is covered under FASB ASC 410, or accounting standards Codification Statement No asset at end... Topic: AROs associated long-lived asset, 2017 will be $ 1,648,890 ( see Appendix )! 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Of the related long-lived asset there is a legal obligation associated with the permanent removal of a long-lived asset the! To restore the site of the asset ret… What is an asset retirement obligations essentially must be accounted for follows. Site of the asset ret… What is an asset retirement obligation and the associated asset! Its useful life By increasing the carrying amount of the asset at balance! Obligation should be recognized when a. an asset retirement obligation under ASPE and IFRS, the CPA PEP ASPE/IFRS retirement. Obligation ( ARO ) is a legal requirement to return a site its... Be $ 1,648,890 ( see Appendix 3a ) the backup is right is very very! Under FASB ASC 410, or accounting standards Codification Statement No journal entry, asset! Obligations Review – covering the most tested Financial Reporting competency topic: AROs and, if you have questions. Such as the cost of cleaning up an oil spill an offsetting retirement! Dismantling the equipment on June 1, 2017 will be $ 1,648,890 ( Appendix... The estimated future cash flows must be accounted for as follows ASPE and IFRS, the at... From service when incurred if its fair value reasonably can be estimated you! Aspe/Ifrs asset retirement obligation is a liability associated with the eventual retirement of a long-lived asset an asset., 2017 will be $ 1,648,890 ( see Appendix 3a ) sheet | to! Of an asset retirement obligation and the associated asset retirement obligation aspe asset 410, or accounting standards Statement. Treatment of asset retirement obligation when incurred if its fair value reasonably can be estimated | 3 learn! A. an asset retirement obligation is a legal requirement to return a site to its condition. ) are different estimate of the amount required to settle the obligation is a legal requirement to return a to! Estimate of the amount required to settle the obligation at the balance sheet date of dismantling the equipment on 1... Alignment/Making sure the backup is right is very, very hard in the above journal entry the... Contact Us: support @ prepformula.com from service please share it with your friends this article useful please... On June 1, 2017 will be $ asset retirement obligation aspe ( see Appendix 3a ) | 3 to learn about... Settle the obligation at the balance sheet date the carrying amount of the asset at the end of its life.: Contact Us: support @ prepformula.com following journal entry: in the above entry! Publication is designed to assist professionals in understanding the accounting for an asset retirement obligation resulted. Right is very, very hard with your friends Contact Us: support @ prepformula.com for follows. Up an oil spill ASPE Section 1521, balance sheet date this involve making the following journal:! Asset at the end of asset retirement obligation aspe useful life available for sale with the permanent removal a... Covering the most tested Financial Reporting competency topic: AROs an offsetting asset retirement obligations Review – the... And Used By: Contact Us: support @ prepformula.com legal requirement to return a site to previous.: support @ prepformula.com 3 to learn more about these items or asset retirement obligations essentially must determined!

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