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How is an asset retirement obligation recorded in the financial statements?

ARO’s are a legal obligation associated with the retirement of a tangible long-lived asset in which the timing or method of settlement may be conditional on a future event, the occurrence of which may not be within the control of the entity burdened by the obligation. ARO’s are typically recorded as a non-current liability unless the company expects they will have to settle the ARO within the next 12 months.


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  • What is an ARO?

    For accounting and financial purposes, ARO stands for “asset retirement obligation”. ARO’s are a legal obligation associated with the retirement of a tangible long-lived asset in which the timing or method of settlement may be conditional on a future event, the occurrence of which may not be within the control of the entity burdened by […]