Accretion expense definition

What is Accretion Expense?

Accretion expense is the ongoing, scheduled recognition of an expense related to a long-term liability. The amount charged to expense represents the change in the remaining discounted cash flows of the liability. The concept is most commonly applied to asset retirement obligations, which usually extend for many years into the future, and so are measured using a discounted cash flows analysis.

An example of a journal entry used to record accretion expense for an asset retirement obligation appears in the following exhibit.

Related AccountingTools Courses

Fixed Asset Accounting

GAAP Guidebook

Related Article

Accretion of Discount