ASC 410 Summary ASC 410 is the accounting standard codification that represents asset retirement and environmental obligations. Under ASC 410, there are two main subtopics which are asset retirement obligations and environmental obligations. Asset retirement obligations are legal obligations that may exist in connection with an entity’s retirement of a tangible long-lived asset. These legal obligations may arise when the entity acquires, constructs, or develops a long-lived asset, or operates a
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the soil remediation in Dirty country. 3. Energy should recognize the retraining costs to compensation expenses. 4. Energy should recognize install smoke filters to expense. AUTHORITATIVE AND INTERPRETIVE GUIDANCE CONSIDERED Refer to ASC 410-20-25-1 (Background for
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handling and disposal of the asbestos laws, but with a legally binding contract to sell the warehouses in six months to a third party? SUMMARY CONCLUSION ON ACCOUNTING QUESTIONS 1. LOI should recognize ARO when the two warehouses conform to ASC 410-20-15 scopes. 2. LOI should recognize ARO for the 10 warehouses in states which have special asbestos handling and removal laws, because there is an unambiguous requirement and an estimate date of retirement. Also, the fair value can be reasonably
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ISSUE: Accounting recognition of LOI’s liabilities related to obligations to handle and dispose of asbestos upon retirement of its warehouses. BRIEF BACKGROUND OF LOI LOI Company owns 50 warehouses in the United States and 25 of the warehouses contain asbestos. 23 of the 25 warehouses reside in states that require special handling and disposal of asbestos when the building is significantly renovated or demolished. LOI plans to sell 10 of the 23 warehouses within 5 years and doesn’t plan
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indeterminately | Issue Should LOI recognize an asset retirement obligation for each of the categories of warehouses with asbestos? Analysis FASB Accounting Standards Codification (ASC) Subtopic 410-20 Asset Retirement Obligations presents the relevant guidance on asset retirement obligations. Per ASC 410-20-15-2, asset retirement obligations include: “a. Legal obligations associated with the retirement of a tangible long-lived asset that result from the acquisition… and (or) the normal operation
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fair value. An entity must begin at the highest level and may work its way down if sufficient information is unavailable. The highest and preferred FVM is quote prices from active markets with the lowest being assumptions developed by the entity 410-20-25-4 An entity shall recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. If a reasonable estimate of fair value cannot be made in the
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Weather Or Not ARO Should Be Recognized In All Three Situations. Asset Retirement Obligations This memo is intend to present appropriate treatment of the ARO estimation problem experienced by the Lack of Information (LOI) based on the findings from interviews with all 50 of the warehouse managers and on-site visits at each of the 50 locations of its warehouses countrywide. The onsite observations search for any evidence of damages in both the on-site property like the roof, walls, floors and
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for Asset Retirement Obligations requiring entities to record liabilities for tangible, long-lived assets that must be retired or disposed of in a specified way by law or contract. Such liabilities are known as Asset Retirement Obligations (AROs) ASC 410-20-25-13 If a current law, regulation, or contract requires an entity to perform an asset retirement activity when an asset is dismantled or demolished, there is an unambiguous requirement to perform the retirement activity even if that activity
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responsible for performing general repair and maintenance on the leased premises. Assuming that the lessee is required to make deposits to financially protect the lessor concerning the maintenance obligation by setting up a reserve, the guidance in ASC 840-10-05-9A through 840-10-05-9C states that the maintenance reserve shall be recognized as a deposit asset and reimbursed later when the required repair and maintenance is completed by the lessee. However, the provision in the lease agreement does
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agreement we are focusing operating lease with provisions of NeedSpace and WeHaveIt, which has a 10 year lease term, no options to renew or negotiate renewal offered in the contract and the lessee incurs certain cost, repairs and maintenance. In regards to ASC 840 leases, according to 840-10-20 and 840-10-05-9A, 840-10-05-9B an operating lease is when the lessor the owner of the property gives the lessee the right to use property, plant or equipment for a limited amount of time. Meaning the lessee is responsible
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