The ARO is initially set up as in Example 1. At expiration, the lease is extended temporarily on a month-to-month basis. On the Term/Options tab, check the Month To Month At Termination box, and set a date into the future for End of MTM (perhaps one year later, January 31, 2034). If you have checked the System Option, “Continue to accrete ARO after scheduled end date using inflation rate,” reports run while the lease is in MTM status accrete the liability according to the inflation rate, so the journal entry for February 2033 is a debit to ARO accretion expense and a credit to ARO liability of 44.67 each. (If the option is unchecked, no activity is reported for the ARO.) If you actually end the lease on July 31, 2033, change the End of MTM date to that date, and set the ARO Term Type to Normal, Term Date to July 31, 2033. The final journal entries are a debit to ARC accumulated depreciation and credit to ARC of 6,832.04 (which does not change during the MTM period), and a debit to ARO liability and credit to ARO expense allowance of 23,662.21 (assuming extended inflation-based accretion).