Jump to content


Photo
- - - - -

Please help


  • Please log in to reply
2 replies to this topic

#1 kxmcpa

kxmcpa

    Newbie

  • CPAnet Member
  • Pip
  • 8 posts

Posted 01 April 2015 - 09:37 AM

Finch Co. reported a total asset retirement obligation of $257,000 in last year's financial
statements. This year, Finch acquired assets subject to unconditional retirement obligations
measured at undiscounted cash flow estimates of $110,000 and discounted cash flow estimates of
$68,000. Finch paid $87,000 toward the settlement of previously recorded asset retirement
obligations and recorded an accretion expense of $26,000. What amount should Finch report for the
asset retirement obligation in this year's balance sheet?
a. $238,000
b. $264,000
c. $280,000
d. $306,000
 
 
 

Choice"b"  is   correct.   why? please help!



#2 SHILPI JAIN

SHILPI JAIN

    Newbie

  • CPAnet Member
  • Pip
  • 1 posts

Posted 01 April 2015 - 12:19 PM

Make a ARO "T" a/c . DR (-)  Amount paid 87000   Ending balance : Plug = 264000. CR(+) Beg ARO + Accretion expense + discounted cash flow.


  • kxmcpa likes this

#3 kxmcpa

kxmcpa

    Newbie

  • CPAnet Member
  • Pip
  • 8 posts

Posted 07 April 2015 - 03:14 AM

Make a ARO "T" a/c . DR (-)  Amount paid 87000   Ending balance : Plug = 264000. CR(+) Beg ARO + Accretion expense + discounted cash flow.

Thank you very much! :)