[IMissMyFreedom]

Does anyone out there understand the journal entries related to Asset Retirement Obligations (SFAS 143)? I’m using Becker 2009 materials and it doesn’t give any examples in F-5. Also, I don’t understand the difference between the accounting of AROs per SFAS 143 and the accounting of Municipal Solid Waste Landfill Closures related to Governmental proprietary/enterprise fund accounting (GASB 18) – found in chapter F-8 of Becker. Is the accounting for these situations done the same way? If anybody knows I’d appreciate some clarification!

BEC 80

AUD 92

FAR (Failed Once)

[Anonymous]

ARO- book an asset and a liability at discounted amount immidiately. yearly expense will reduce the liability & accretion expense will increase the liability yearly to arrive at the undiscounted amount.

The Dump- early expense will increase the liability that should equal the real liability when retired.

So the difference is really about timing. Now again, I might be wrong too, no expert.

Hope that helps. I have my exam today (in like 3 hours)… 🙁

[IMissMyFreedom]

Thanks for the reply Bigshot. Hope you did okay.

Does anyone know if annual accretion expense is recorded for Dump accounting or does that relate to AROs only? I think the main difference between the Dump method and the ARO method is evident at the date of retirement. With AROs, there may be a difference b/w the ARO and the ARC, creating a possible gain/loss. With Dump accounting- there is no gain/loss at closure date because the estimated closing costs and the related liability are adjusted each year. So total costs incurred will = the liability at the closure date. Sound right?

General Forum Policy Question- Can these forums be used to seek opinions or ask questions regarding detailed accounting methods like this? Or is this not an intended purpose for this site? For example, can I make up a hypothetical scenario with journal entries and ask if it looks like I did them correctly?

[IMissMyFreedom]

Think I get it now. But feel free to correct me if I'm off base.

For the DUMP accounting- The estimated total costs of dump closure and postclosure costs are to be DISCLOSED. This amount is determined as the estimated dump disbursements incurred on or after the date the dump stops accepting waste.

So each year the town recognizes annual CURRENT portion of estimated total Dump Closure and Postclosure costs (disclosed amount) based on usage.

DR- Estimated Current Cost of Dump Closure/Postclosure Care (Expense)

CR- Dump Closure/Postclosure Liability

Also, The total disclosed amount for Estimated Total Costs of Dump Closure is adjusted annually as a MEMO ENTRY.

At date of closure- all expenses have been recognized at this point based on usage.

[Author]

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