Quiz 10.63 – Understanding Asset Retirement Obligations
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
What are asset retirement obligations?
What are asset retirement obligations?
When a company acquires a tangible long-lived asset and incurs legal obligations associated with its retirement, how should the company account for the obligations?
What item is NOT relevant to accounting for asset retirement obligations?
The initial valuation natural resource asset should include expected cost of asset retirement obligation settled at end of resource’s useful life. True or false?
A debit to the related asset and a credit to liability for an amount equal to the undiscounted sum of expected cash outflows are recorded if an asset retirement obligation is associated with a natural resource.
What is the method used to value assets acquired in a lump-sum purchase?
Costs incurred after natural resource discovery but before production begins are expenses of the period in which the expenditures are made. True or false?
What is the method used to value assets acquired under multi-year deferred payment contracts?
In what circumstances will an acquired asset using a long-term note payable be recorded at the face amount of the note?
Which of the following statements is correct when an asset is acquired using a noninterest-bearing note payable for $100,000 due in two years, and management records the purchase with a debit to the asset for $100,000 and a credit to notes payable for $100,000?