[cpacpacpa33]

Hoping someone can help me out–

When you record depreciation expense each year for an asset retirement obligation I know you debit depreciation expense but how do you know whether to credit asset retirement cost or accumulated depreciation??

AUD: RETAKE January

BEC: Pass Q3 2017

FAR: Pass Q3 2017

REG: Pass Q3 2017

[Wannafree]

First year
Asset retirement cost (ARC) DR (PV for future retirement cost X )
Asset retirement obligation Cr

Accretion expense Dr (X* interest rate % )
Asset retirement obligation Cr

Depreciation expense Dr
ARC accumulated depreciation Cr
(Annual depreciation)
Second year
Accretion expense Dr (X* interest rate % )
Asset retirement obligation Cr

Depreciation expense Dr
ARC accumulated depreciation Cr
(Annual depreciation)
Final year

Asset retirement obligation DR
Asset retirement obligation DR
ARC accumulated depreciation Dr

Cash (for services rendered) CR
Asset retirement cost (ARC) CR
Gain on termination Cr
I hope it will help.

WannaB

[cpacpacpa33]

Thank you soooo much @wannafree

AUD: RETAKE January

BEC: Pass Q3 2017

FAR: Pass Q3 2017

REG: Pass Q3 2017

[Author]

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