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Asset Retirement Obligations

12 Months Ended

Mar. 31, 2012

Notes to Financial Statements [Abstract]

Mexco’s asset retirement obligations relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period, and the capitalized cost is depreciated over the useful life of the related asset.

The following table provides a rollforward of the asset retirement obligations for fiscal years ended March 31:

	2012			2011
Carrying amount of asset retirement obligations as of April 1	$	578,911		$	536,305
Liabilities incurred		53,468			25,043
Liabilities settled		(5,351	)		(16,566	)
Accretion expense		36,251			34,129
Carrying amount of asset retirement obligations as of March 31		663,279			578,911
Less: Current portion		50,000			50,000
Non-Current asset retirement obligation	$	613,279		$	528,911

The ARO is included on the consolidated balance sheets with the current portion being included in the accounts payable and accrued expenses.

- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

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