A company is legally obligated for the costs associated with the retirement of a long-lived asset
A) only when it hires another party to perform the retirement activities.
B) only if it performs the activities with its own workforce and equipment.
C) whether it hires another party to perform the retirement activities or performs the activities itself.
D) when it is probable the asset will be retired.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), a company is obligated to recognize the costs associated with retirement of a long-lived asset, whether it performs the activities with its own workforce and equipment or hires another party to perform the retirement activities. The obligation to recognize the costs arises when it is probable that the asset will be retired. Therefore, choice C is the best answer.

A Company Is Legally Obligated for the Costs Associated with the Retirement