Gamble Company, a successful efforts company, owns a working interest in an oil field in Alaska. The field has been producing for a number of years and is expected to be producing for another years. On January the net book value of the field wells, equipment, and facilities totals $ Gamble defer mines that it should book an ARO in relation to the field. The undiscounted future cash flows to settle the ARO are estimated to be $ When discounted a a rate of for years, the present value is $ Later hat year, Gamble's chief accountant determines that, due to changes in the Late tax laws, the field should be assessed for impairment. Analysis gieds ine
following information: CHAPTER Impairment and Disposal of LongLived Assets
Later that year, Gamble's chief accountant determines that, due to changes in the
state tax laws, the field should be assessed for impairment. Analysis yields the
following information:
tableUndiscounted,DiscountedEstimated future net cash flows before ARO,$$
