All articles in this category pertain to ARO accounting, also known as asset retirement obligation accounting. ARO refers to the legal obligation associated with the cost for retirement of a long-term asset, such as a company removing equipment on an agreed-upon date between both parties. Companies must record their AROs on their financial statements.
This applies to companies using physical assets, such as infrastructure, to be dismantled or removed before the lease ends. For example, if a company installs underground equipment on the leased property when their lease ends, they must remove the equipment from the premises.
Learn more about ARO accounting below.