Under ASPE, an asset retirement obligation should be recognized when
A) an asset is impaired and is available for sale.
B) operation of an asset has resulted in an additional obligation such as the cost of cleaning up an oil spill.
C) there is a legal obligation to restore the site of the asset at the end of its useful life.
D) the company has an obligation to purchase a long-lived asset.

Question

Quizplus · Accepted Answer

An asset retirement obligation should be recognized when there is a legal obligation to restore the site of the asset at the end of its useful life. This means that the company is legally obligated to remove the asset or restore the site to its original condition. This obligation arises when the asset is initially constructed or installed and it is estimated that removal or restoration will be required at the end of its useful life.

Under ASPE, an Asset Retirement Obligation Should Be Recognized When