Reporting Effects of SFAS 143 on Nuclear Decommissioning Costs |
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Authors: | Richard Schroeder Suzanne Sevin Kathryn Yarbrough |
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Institution: | (1) University of North Carolina at Charlotte, U.S.A |
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Abstract: | SFAS 143, Accounting for Asset Retirement Obligations, has the potential to cause significant economic consequences to firms
impacted by its provisions. BK&L (Boatsman, J. R.; Khurana, I. K.; Loudder, M. L. “The Economic Implications of Proposed Changes
in the Accounting for Nuclear Decommissioning Costs,” Accounting Horizons, 14 (2), June 2000, pp. 211–233) suggests that companies
would be required to record materially increased assets, liabilities, and expenses which may subsequently cause a significant
impact to commonly used financial ratios. BK&L developed predictions of the pro forma effect on assets, liabilities, and expenses
due to SFAS 143 adoption by nuclear power utilities. This study examines the actual financial statement effect on BK&L's sample
firms due to the adoption of SFAS 143. Results indicate that concern voiced over the standard's requirement to capitalize
asset retirement obligations and the related asset, and to record additional expenses by nuclear power companies may have
been unfounded. |
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Keywords: | M41 |
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