Asset Retirement Obligation

Рет қаралды 39,570

10 жыл бұрын

This video explains how to account for an asset retirement obligation in the context of financial accounting. An example is presented to illustrate how an ARO is accounted for as well as the necessary journal entries.
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Пікірлер: 46

@jonathanwieler8863 4 жыл бұрын

I recommend all of your videos to my peers in college. You do SUCH a good job teaching these concepts!

@MyFinancialFocus 2 жыл бұрын

I love how just studying accounting introduces me to all of the things that bigger businesses go through.

@bin-ob 5 ай бұрын

Great explanation, but minor correction, it's called "accretion expense" not an interest expense because it's not a note or a bond. Thank you!

@MyteeBumbleBee 4 жыл бұрын

Thank you...THANK YOU! I just needed a simplified and detailed explanation without all the double babble I kept encountering from the published statements online. I understand how this concept works and the instructor's explanation with a perfect example was exactly what I needed. Thank you so much! I'm a subscriber now!

@godofwar2060 9 жыл бұрын

Thanks for the help. I was having a hard time with this!

@leahk7057 9 жыл бұрын

Thank you very much for your great video!

@raviagarwal2793 3 жыл бұрын

Too good and simply explained. Thanking you for every video you have uploaded for such concept explanations.

@lithtanumi3874 4 жыл бұрын

Great explanation! Thank you.

@gabriellaann4426 9 жыл бұрын

GREAT VIDEO THANK YOU!

@metincaglar5798 7 ай бұрын

Great explanation. Thank you for all videos.

@Msgoodpuppy247 3 жыл бұрын

Thank you!! This was very helpful! I was stuck on this part while studying for my CPA exam

@rawanalzubi6144 2 жыл бұрын

This is an amazin explanation, Thanks a lot !

@Silmeria0724 6 жыл бұрын

I just discovered your videos and they are awesome! Thank you so much!! I`ve been using them in conjunction with my online classes.

@Edspira 6 жыл бұрын

Fantastic...Best of luck to you in your studies!

@Workerbee562 6 жыл бұрын

Great video! well explained

@ahmedwagih5752 3 жыл бұрын

Thank you so much. You are a life saver

@stephenbishopp10 5 жыл бұрын

I've heard the periodic entry to increase ARO has a Debit to Accretion Expense instead of Interest Expense. Could you please explain this? Is the only explanation for this expense to increase the ARO to eventually become the future value of the obligation?

@zainabdurrani7417 6 жыл бұрын

very helpful video

@pmearsh 6 жыл бұрын

Thank you so much for this videos. AROs did not make sense to me before, now they are simple & easy to understand. Very helpful.

@Edspira 6 жыл бұрын

Thanks Pamela!

@gowthen1 10 жыл бұрын

thank you it makes sense

@vickiliu4887 4 жыл бұрын

great video!!

@virgomillennium 4 жыл бұрын

I just discovered this channel. Life saver tutorial ! Thank you

@Edspira 4 жыл бұрын

Happy to help!

@ariah5093 9 ай бұрын

Thank you!

@natasha_dh 8 жыл бұрын

very helpful

@user-kl6gg7og8r 2 жыл бұрын

I can't believe it can be this good

@ExcelTutorials1 2 жыл бұрын

This was amazingly helpful, thank you so much!

@Edspira 2 жыл бұрын

Glad it was helpful!

@Amiyaamil 4 жыл бұрын

Thank you for making this video.do u have video on participation of dividends? I didn't find that in your playlist.

@gymbymanVice 3 жыл бұрын

great !

@mspolicecall 3 жыл бұрын

This holds hands with my intermediate accounting by Gordon and raedy textbook

@Edspira 3 жыл бұрын

Happy to help!

@jayceebalanag6511 Жыл бұрын

how do you do that?

@levytheman91 7 жыл бұрын

Shouldn't depreciation be the ARO+assets value/useful life?

@hcamry 5 жыл бұрын

Thank you. But what I dont understand is why is there an ARO asset in the first place. Lets say I build a factory for $500k. Then later I realize there is an ARO liability in the future costing $2 million after 10 years. So would there be an additional ARO asset also with pv of $2 million in addition to the asset? Couldnt there not be a contra liability instead to balance them out. It doesnt make sense (i know it is gaap but i think it doesnt make sense)

@Sweettish14 5 жыл бұрын

h corolla I agree.

@cplancarte4 8 жыл бұрын

So if I'm correct, the Gain at settlement will be reflected on the balance sheet at year end as an asset? The other would be income statement, and be reflected as "Other Income." Answers, thoughts.

@cplancarte4 8 жыл бұрын

Per PWC, "For transactions in which the asset or service surrendered is not the reporting entity’s normal product or service, recording the transaction as other income is appropriate. "

@samuelkwon5824 6 жыл бұрын

So essentially, we figure out what the cost is to retire the asset, and accrue the ARO as a liability account to that amount (accrued through interest expense cap), and then retire Db. ARO Cr. Cash and record the gain or loss if any. The question I have is what is the interest expense rooted in? A loan we took out to buy the asset?

@lookitskirby 3 жыл бұрын

Remember that the ARO is recorded in it's present value calculation. It's not based off a loan but an obligation we agreed to when we signed a contract or lease. A better name for interest expense is accretion expense which is the cost associated with an increase in a liability’s carrying value over time

@wowstarcraft 3 жыл бұрын

What amount would be the ARO for interest expense in 2018 and 2019?

@lookitskirby 3 жыл бұрын

ARO Interest Exp Present Value Jan-1-2017 - 375,657 Dec-31-2017 37,566 413,223 Dec-31-2018 41,322 454,545 Dec-31-2019 45,455 500,000 To calculate the interest expense, multiply the discount rate by the current present value of the ARO.

@natasha_dh 8 жыл бұрын

very helpful