Practice prompt · Q:tangible-asset-acquisition-capitalization-and-resources/accretion-versus-depreciation-001

Separate accretion from the depreciation of a retirement cost

Tests whether the learner keeps the liability and the capitalized cost moving independently after initial recognition.

Updated Aug 18, 2026 Review due Nov 18, 2026

Practice

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Netting the two is the common error. It leaves the liability short of the amount that will actually be paid and the asset carrying more cost than it should.

Choose the best answer. a Two expenses arise each year: accretion, which increases the liability, and depreciation of the capitalized retirement cost, which does not touch it. b One expense arises, because accretion and depreciation are two names for the same allocation. c Accretion is reported as interest expense, because it is computed by applying a rate to a balance. d The capitalized retirement cost is not depreciated, because the obligation is settled in cash at the end.

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Answer: a

Choice a. One original event produces two expenses that run independently for the life of the asset.