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 general conditions. The interview with the managers obtains information about the characteristics of the warehouses that are not readily observable. The information obtained is very important in the preparation of the fiscal …show more content…
In ASC 410-20-55-47 through 48, there are alternative ways of recognizing a conditional asset Retirement Obligation. First in ASC 410-20-55-11 it is required that these cases initially recognize a conditional asset retirement obligation based on all the facts about the asset that are currently presented. These conditions are then compared with four cases that illustrate when an entity would be required to recognize the fair value of an ARO. The two disadvantages of these method is that any differences in the facts from those presented in the cases results in different conclusion and the cases do not provide specific guidance for determining when and entity is declared as to have sufficient information to estimate the fair price reasonably.
A major advantage is if the conditions matches the cases then an ARO is can be made which will be to the advantage of LOI since the third party takes away the asbestos without additional pay.Alternatively, the ASC 410-20-55-48 provide a means of estimating the ARO when there is no sufficient information to do so using four cases. If an entity has no sufficient information to reasonably estimate the fair value of an asset retirement obligation at the time the obligation is incurred Case C is used to determine the ARO. The advantage is that the fair