Asset Retirement Obligations: ASPE 3110

Within the Accounting Standards for Private Enterprises (ASPE), it is essential to remember that the word "Provision" cannot be used under any circumstances.
An Asset Retirement Obligation ( $A.R.O$ ) must be legally enforced to exist under $ASPE\,3110$ .

An $A.R.O$ is defined as a legal obligation associated with the retirement of a tangible long-lived asset.
An entity is required to settle this obligation as a result of one of the following:
- An existing or enacted law.
- A statue.
- A written or oral contract.
- Legal construction of a contract under the law.

Recognition ( $ASPE\,3110.57$ ):
- An obligation shall be recognized in the period in which it is incurred.
- This recognition takes place when a reasonable estimate of the obligation can be made.
Measurement ( $ASPE\,3110.97$ ):
- The measurement shall be the best estimate of the obligation or expenditure required to settle the obligation at the balance sheet date.
Present Value Technique ( $ASPE\,3110.147$ ):
- A present value ( $P.V$ ) technique is often the best available technique with Which to estimate the expenditure.

To recognize the asset and the obligation:
- Debit: Asset
- Credit: $A.R.O$
To record ongoing depreciation expense:
- Debit: Depreciation Expense
- Credit: Accum.Depreciation

Re-measurement requires the use of $Appendix\,A$
Accretion Expense ( $A29$ ):
- A period-to-period increase in the carrying amount of the liability is recognized as accretion expense.
- Journal Entry:
- Debit: Accretion Expense
- Credit: $A.R.O$
Revisions to Previously Recorded Obligations ( $A30$ ):
- Changes in the previously recorded $A.R.O$ often result from changes in the assumptions used.
- Variable changes to consider include:
- Time
- Mates
- Payments
- Anything utilized in the calculation of $P.V$
Impact of Revisions ( $A31$ ):
- Any revisions made to an $A.R.O$ will affect the depreciation of the underlying asset.