I think I more or less understand what an ARO is and how it is accounted for, but my question is about what happens in the final year and how it affects all 3 statements (and this maybe outside the scope of the exam, but I still feel I should know). At the end of the asset’s life when the liability is at its full value on the BS is it then reduced/removed once the company actually spends the money to retire the asset? And since it has already been recognizing these expenses over the life of the asset it shouldn’t run through the IS again, right-and now just the actual cash spent in retiring would be shown as an outflow? Does anyone know if this is how the accounting works in the final year and beyond? Thanks.