Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 6

Determine whether the following statements are true or false.
a. Full cost companies do not book AROs.
b. An oral agreement to dismantle equipment and restore the environment at the end
of the productive life of a facility would result in the recording of an ARO.
c. A change in the discount rate should result in the reestimation of AROs.
d. A company had an oil spill resulting from a tanker running aground. The company
should immediately accrue an ARO.
e. Either gains or losses may be recognized when an ARO is settled.
f. Companies must test all of their long-lived assets for impairment on an annual basis.