To record an asset retirement obligation (ARO), the cost associated with the ARO is
A)expensed.
B)included in the carrying amount of the related long-lived asset.
C)included in a separate account.
D)none of these.

Question

Quizplus · Accepted Answer

The cost associated with an ARO should be added to the carrying amount of the related long-lived asset and recorded as part of the cost of the asset. This means that it will be depreciated over the useful life of the asset and recognized as an expense over time. By doing this, the company is allocating the cost of the ARO to the periods in which it is benefiting from the use of the asset.

To Record an Asset Retirement Obligation (ARO), the Cost Associated