Question
Asset Retirement Obligation The mine has a 30-year life starting in 2018. It was expected then that site restoration would cost $75 million and a
Asset Retirement Obligation
The mine has a 30-year life starting in 2018. It was expected then that site restoration would cost $75 million and a separate property, plant, and equipment account for this ARO (asset retirement obligation) was set up. A 6% discount rate was used to value the related ARO. At the beginning of 2019, an external geo-technical evaluation showed that the eventual cost will be $90 million. Adam recorded the same amounts for 2019 as for 2018 for interest on the ARO and depreciation, and otherwise did not update any accounting for the ARO in 2019 nor did he include the impact if any from the ARO revaluation.
Issues with accounting of ARO above.
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