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By Greg Rogers, JD, CPA
Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (FAS 143), requires companies to recognize the fair value of a liability for an asset retirement obligation (ARO) in the period in which it is incurred if a reasonable estimate of fair value can be made. AROs are legal obligations associated with the retirement of a tangible,
long-lived asset (e.g., property, plant, and equipment) that result
from the acquisition, construction, development and/or the normal operation
of the asset. Retirement is defined as the other-than-temporary removal
of a long-lived asset from service by sale, abandonment, recycling or
disposal in another manner. |
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