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ASSET RETIREMENT OBLIGATIONS
12 Months Ended
Dec. 31, 2014
ASSET RETIREMENT OBLIGATIONS [Abstract]  
ASSET RETIREMENT OBLIGATIONS

NOTE 17: ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets resulting from the acquisition, construction, development and/or normal use of the underlying assets.

Recognition of a liability for an ARO is required in the period in which it is incurred at its estimated fair value. The associated asset retirement costs are capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset. The liability is accreted through charges to operating expenses. If the ARO is settled for other than the carrying amount of the liability, we recognize a gain or loss on settlement.

We record all AROs for which we have legal obligations for land reclamation at estimated fair value. Essentially all these AROs relate to our underlying land parcels, including both owned properties and mineral leases. For the years ended December 31, we recognized ARO operating costs related to accretion of the liabilities and depreciation of the assets as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands

2014 

 

 

2013 

 

 

2012 

 

ARO Operating Costs

 

 

 

 

 

 

 

 

Accretion

$        11,601 

 

 

$        10,685 

 

 

$        7,956 

 

Depreciation

4,462 

 

 

3,527 

 

 

5,599 

 

Total

$        16,063 

 

 

$        14,212 

 

 

$      13,555 

 

 

ARO operating costs are reported in cost of revenues. AROs are reported within other noncurrent liabilities in our accompanying Consolidated Balance Sheets.

Reconciliations of the carrying amounts of our AROs for the years ended December 31 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

in thousands

2014 

 

 

2013 

 

Asset Retirement Obligations

 

 

 

 

 

Balance at beginning of year

$      228,234 

 

 

$      150,072 

 

 Liabilities incurred

9,130 

 

 

69,111 

 

 Liabilities settled

(26,547)

 

 

(16,203)

 

 Accretion expense

11,601 

 

 

10,685 

 

 Revisions up, net

4,147 

 

 

14,569 

 

Balance at end of year

$      226,565 

 

 

$      228,234 

 

 

The ARO liabilities incurred during 2014 relate primarily to the 2014 acquisitions (see Note 19).

The increase in liabilities settled during 2014 and the ARO liabilities incurred during 2013 relate primarily to reclamation activities required under a development agreement and a conditional use permit at an aggregates facility on owned property in Southern California. Upward revisions to our ARO liability during 2013 are largely attributable to an adjacent aggregates facility on owned property. The reclamation requirements at this property will result in the restoration and development of mined property suitable for commercial and retail development. The estimated cost to fill and compact the property increased and the estimated settlement date decreased resulting in an upward revision to the ARO.