Normal, early, transfer, and reversal terminations are supported. All layers of an ARO are terminated at the same time, in the same way. To settle a portion of an ARO, enter an ARO Payment.
A normal termination means that the asset has been removed from service and the obligation has been triggered. The ARC asset, accumulated depreciation, and ARO liability are all removed; the difference is recognized as an expense allowance to be applied against the actual costs (if the allowance is larger than the actual cost, you will have a gain, which is reported separately).
Early Termination means that the ARO is ended early, with no money expended to actually settle the obligation; income statement activity ends as of the date specified, and all balance sheet amounts are removed, with a gain or loss taken for the difference between asset and obligation. This would be used if, for instance, you sell the property and the buyer takes over responsibility for the ARO.
Transfer Termination is almost the same as Early, but is intended to be paired with a transfer addition on another ARO, on this or a different lease. See transfer add for more details on this transaction. In order to pair up the ARO records and not double-count, no accretion or depreciation activity is recognized on an ARO on the date of a transfer termination (the activity of that day is recognized on the transfer addition).
Reversal reverses all activity from ARO inception to date; the net effect is as if the ARO was never on the system, but the reversal is booked on the date of the termination, so that prior reports are unaffected by the removal of the lease. You can then replace the ARO with correct information, if appropriate.
Any termination should be dated in the current (or a future) reporting period to prevent out-of-balance errors.