Depreciate and accrue the interest expense for asset retirement obligations

This article explains how to depreciate and accrue the interest expense for asset retirement obligations (ARO) for Japan in Microsoft Dynamics 365 Finance.

For Japan, the depreciation of ARO is processed along with the fixed asset. Interest expenses need to be accrued to recognize the full amount of the ARO.

The following procedures were completed using the JPMF demo company data.

Before you complete the procedures, you must first select the Fixed Asset configuration key.

Depreciate a fixed asset with asset retirement obligation

To depreciate a fixed asset with asset retirement obligation, follow these steps.

1. In Dynamics 365 Finance, go to Fixed assets > Journal entries > Fixed assets journal.
2. Select New.
3. In the Name field, select a value.
4. Select Save.
5. Select Lines.
6. Select Proposals.
7. Select Depreciation proposal.
8. In the To date field, enter a date.
9. Select Filter.
10. In the Criteria field, enter a value.
11. Select OK.
12. Select OK. The depreciation of asset retirement obligation is indicated by Document type field value.
13. Select Post.

Accrue the interest expense

To accrue the interest expense, follow these steps.

1. In Dynamics 365 Finance, go to Fixed assets > Journal entries > Fixed assets journal.
2. Select New.
3. In the Name field, enter a value.
4. Select Save.
5. Select Lines.
6. Select Proposals.
7. Select Asset retirement obligation - accretion expense.
8. In the To date field, enter a date.
9. Select Filter.
10. In the Criteria field, enter a value.
11. Select OK.
12. Select OK. Confirm that the records for interest expenses are proposed. The interest expenses are indicated by the transaction type.
13. Select Post.