Which of the following is most accurate concerning plant decommissioning costs and unfunded retirement plans?
A)They are both long-term operating provisions and should be treated as debt equivalents.
B)They are both short-term operating provisions and should be treated as short-term liabilities.
C)They are both long-term operating provisions.Plant decommissioning costs should be treated as a debt equivalent,and unfunded retirement plans should be treated as an equity equivalent.
D)Plant decommissioning costs are not an operating provision and should not be included in value estimation.Unfunded retirement plans are long-term operating provisions and should be treated as an asset.

Question

Quizplus · Accepted Answer

Plant decommissioning costs and unfunded retirement plans are both long-term obligations that a company must eventually pay. Therefore, they are often treated as debt equivalents because they represent future cash outflows that the company is obligated to meet, similar to the way debt obligations function.

Which of the Following Is Most Accurate Concerning Plant Decommissioning