When part of a business is to be sold rather than closed, under which circumstances can an obligation be recognized?
A. As a separate asset
B. As a note to the financial statements
C. Offset against the provision
D. As a separate liability
When part of a business is to be sold rather than closed, an obligation related to that sale would typically be recognized as a separate liability. This is because the obligation arises from a past event (the decision to sell) and meets the criteria for recognition as a liability, such as being a present obligation and the amount being reliably measurable. Therefore, the correct answer is:
D. As a separate liability