Accounting for Asset Retirement Obligations (ARO)
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Questions and Answers

What is the purpose of entering a price key date for cost estimation in ARO valuation?

To determine the cost estimation amount valid on the transaction date

What happens when you release the transaction in SAP S/4HANA for accounting integration?

The application determines the transaction processing key date automatically and creates necessary financial postings

How can you adjust an existing cost estimation for an ARO?

By creating a new cost estimation plan (CEP) or updating an existing one

What is the purpose of checking calculation details for each relevant accounting principle?

<p>To get an overview of the provisions and any relevant interest costs</p> Signup and view all the answers

What is used to calculate the equivalent cost estimation amount valid on the transaction date?

<p>The general inflation rate key of the ARO</p> Signup and view all the answers

What should you do if you have cost estimation amounts determined using a price index valid on the transaction date?

<p>Use the transaction date as the pricing key date and enter the cost estimation amount</p> Signup and view all the answers

What is the result of releasing the transaction in SAP S/4HANA?

<p>Necessary financial postings are created for accounting integration</p> Signup and view all the answers

How can you access the transaction /FOM/AM02 in SAP GUI?

<p>By opening the SAP Easy Access menu (/FOM/MENU preceded by /n) and choosing ARO Processing -&gt; Change Asset Retirement Obligation</p> Signup and view all the answers

What is the benefit of checking calculation details for each accounting principle?

<p>You get an overview of the provisions and any relevant interest costs</p> Signup and view all the answers

What is the purpose of cost estimation in ARO valuation?

<p>To determine the cost estimation amount valid on the transaction date</p> Signup and view all the answers

What is the role of the general inflation rate key in ARO valuation?

<p>It is used to calculate the equivalent cost estimation amount valid on the transaction date</p> Signup and view all the answers

Study Notes

ARO Cost Estimation

  • ARO asset created in 2006, with two cost estimation items: $60,000 with a settlement date of 31.12.2035 and $80,000 with a settlement date of 31.12.2040
  • In 2011, parts of the underlying object were retired: 10% of the first cost estimation item and 25% of the second cost estimation item

Retirement and Cost Estimation Adjustment

  • The overall size of retirement can be calculated using item-level cost estimation values and corresponding percentage rates
  • The overall size of retirement can be manually set, e.g., to 20% in this example
  • Adjusting a cost estimation is possible in SAP GUI and in the Manage Asset Retirement Obligations app

ARO Valuation and Interest-Based Updates

  • Interest-based updates are usually carried out as mass adjustments for all AROs
  • ARO valuation requires cost estimations valid on the transaction date
  • The application calculates the equivalent cost estimation amount valid on the transaction date using the general inflation rate key of the ARO

Transaction Processing

  • Before releasing a transaction, calculation details can be checked for each accounting principle
  • Releasing the transaction creates necessary financial postings using SAP S/4HANA for accounting integration
  • The application determines the transaction processing key date automatically, storing a timestamp and user ID for the transaction

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Description

This quiz is about accounting for asset retirement obligations (ARO) according to IFRS. It involves calculating the cost estimation and settlement dates for ARO assets. Understand how to customize and represent ARO assets.

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