Oil & Gas
ARO Revision — Change in Cost Estimate
Revising the ARO liability upward when new engineering studies increase decommissioning cost estimates.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Oil & Gas Properties (ARO Revision Added) | Asset (+) | 2,000,000.00 | - |
| Asset Retirement Obligation (Revised) | Liability (+) | - | 2,000,000.00 |
💡 Accountant's Note
ARO estimates are revised regularly as technology, regulations, and cost indices change. Upward revisions increase both the asset and liability. The additional asset cost is depleted over the remaining reserve life.
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