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Asset Retirement Obligations

12 Months Ended

Mar. 31, 2013

Asset Retirement Obligation Disclosure [Abstract]

6. Asset Retirement Obligations

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:

	2013	2012
Carrying amount of asset retirement obligations as of April 1	$ 663,279	$ 578,911
Liabilities incurred	114,003	53,468
Liabilities settled	(3,246)	(5,351)
Accretion expense	39,376	36,251
Carrying amount of asset retirement obligations as of March 31	813,412	663,279
Less: Current portion	50,000	50,000
Non-Current asset retirement obligation	$ 763,412	$ 613,279

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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