What condition(s) is/are necessary to recognize an asset retirement obligation?
A) Company has an existing legal obligation and can reasonably estimate the amount of the liability.
B) Company can reasonably estimate the amount of the liability.
C) Company has an existing legal obligation.
D) Obligation event has occurred.

Question

Quizplus · Accepted Answer

To recognize an asset retirement obligation, the company must have an existing legal obligation (such as a decommissioning requirement) and be able to reasonably estimate the amount of the liability associated with the obligation. Simply having an obligation event occur or being able to estimate the liability without a legal obligation is not sufficient.

What Condition(s) Is/are Necessary to Recognize an Asset Retirement Obligation