• 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. 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. What is an Asset Retirement Obligation? Introducing, the CPA PEP ASPE/IFRS Asset Retirement Obligations Review – covering the most tested Financial Reporting competency topic: AROs. 7 Deloitte earning Academy ourse catalogue or accounting proessionals 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 0 The decision tree in the Appendix provides a … 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. 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/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. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. 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. 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 … Thank you! Register Now. 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. 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. ��`�10�371�fyâ���bü�%��;�..U�w�M����f8�碔��S����-)[h�i2��� iF6. b. operation of an asset has resulted in an additional obligation such as the cost of cleaning up an oil spill. An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. 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. 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 In accounting, an asset retirement obligation (ARO) describes a legal obligation associated with the retirement of a tangible, long-lived asset, where a … 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. Entities at the same time must recognize an offsetting asset retirement cost by increasing the carrying amount of the related long-lived asset. 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�*. $55 However, under both standards the present value of the estimated future cash flows must be determined. The entire disclosure for an asset retirement obligation and the associated long-lived asset. 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. The present value of dismantling the equipment on June 1, 2017 will be $1,648,890 (see Appendix 3a). Similar to asset retirement obligation covered under ASPE 3110 Decommissioning/restoration is recognized as a Liability (per IAS 37 – provisions); and As … 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 … The accounting for these obligations is covered under FASB ASC 410, or Accounting Standards Codification Statement No. 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. … ASPE IFRS Restructuring Costs Under ASPE, there is no specific standard that provides … c. there is a legal obligation to restore the site of the asset at the end of its useful life. principle which includes asset retirement obligations, whereas IFRS 3 does not explicitly allow for an exception for asset retirement obligations. 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. The obligation is recognized at the best estimate of the amount required to settle the obligation at the balance sheet date. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. 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�� - 1-888-987-0858. endstream endobj startxref Getting alignment/making sure the backup is right is very, very hard. Trusted And Used By: Contact Us: support@prepformula.com. 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. 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