Which of the following is an example of a liability where there is no corresponding asset?
A) A debenture issued by a listed company.
B) A mortgage.
C) A provision for warranties.
D) A provision for decommissioning.

Question

Quizplus · Accepted Answer

A provision for decommissioning is a liability without a corresponding asset because it represents the estimated cost of dismantling and removing long-lived assets such as oil rigs or nuclear power plants at the end of their useful lives. There is no corresponding asset to offset this liability because the asset will no longer exist by the time decommissioning takes place. The other options all have corresponding assets - debentures are backed by the company's assets, mortgages are secured by the property, and provisions for warranties are offset by the revenue generated from sales.

Which of the Following Is an Example of a Liability