Accounting for Asset Retirement Obligations

3 Months Ended

Apr. 01, 2018

Accounting for Asset Retirement Obligations [Abstract]

Accounting for Asset Retirement Obligations

Note 12. Accounting for Asset Retirement Obligations

The Company records asset retirement obligations for situations in which the Company will be required to incur costs to retire tangible long-lived assets.  The fair value of the liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.

The Company also records liabilities related to land reclamation as a part of asset retirement obligations.  The Company mines various minerals using a surface mining process that requires the removal of overburden.  In certain areas and under various governmental regulations, the Company is obligated to restore the land comprising each mining site to its original condition at the completion of the mining activity.  The obligation is adjusted to reflect the passage of time, mining activities, and changes in estimated future cash outflows.

The following is a reconciliation of asset retirement obligations as of April 1, 2018:

	(millions of dollars)
Asset retirement liability, December 31, 2017	$	22.1
Accretion expense		0.1
Other		(1.1	)
Payments		(0.6	)
Foreign currency translation		0.1
Asset retirement liability,  April 1, 2018	$	20.6

The asset retirement costs are capitalized as part of the carrying amount of the associated asset.  The current portion of the liability of approximately $0.3 million is included in other current liabilities and the long-term portion of the liability of approximately $20.3 million is included in other non-current liabilities in the Condensed Consolidated Balance Sheet as of April 1, 2018.