Some Assets, Such as a Space Shuttle, Are Not Readily

question 155

Multiple Choice

Some assets, such as a space shuttle, are not readily salable at the end of their useful lives, and retiring them may impose substantial costs.Which of the following is true?

• A)Firms recognize a liability, referred to as an asset retirement obligation at the present value of the estimated dismantling costs.
• B)Firms recognize a liability, referred to as an asset retirement obligation at the estimated fair value of the dismantling costs.
• C)Firms recognize a liability, referred to as an asset retirement obligation at the estimated future value of the dismantling costs.
• D)Firms recognize a liability, referred to as an asset retirement obligation at the estimated liquidation value of the dismantling costs.
• E)Firms do not recognize a liability because such costs are uncertain in nature and the firms can always file for bankruptcy to avoid the dismantling costs.