Stranded asset

<p>Stranded assets are "<a href="/facts/Asset/o7TARXhB">assets</a> that have suffered from unanticipated or premature <a href="/facts/Revaluation_of_fixed_assets/rEpQdD0v">write-downs</a>, devaluations or conversion to <a href="/facts/Liability_(financial_accounting)/cvyGGW4w">liabilities</a>". Stranded assets can be caused by a variety of factors and are a phenomenon inherent in the '<a href="/facts/Creative_destruction/rIW1r0xM">creative destruction</a>' of economic growth, transformation and innovation; as such they pose risks to individuals and firms and may have systemic implications.   <a href="/facts/Climate_change/rEN4BDE7">Climate change</a> is expected to cause a significant increase in stranded assets for carbon-intensive industries and investors, with a potential ripple effect throughout the world economy.
</p><p>The term is important to financial <a href="/facts/Risk_management/xGhxtxdp">risk management</a> in order to avoid <a href="/facts/Pure_economic_loss/XBtTseIk">economic loss</a> after an <a href="/facts/Asset/o7TARXhB">asset</a> has been converted to a <a href="/facts/Liability_(financial_accounting)/cvyGGW4w">liability</a>. Accountants have measures to deal with the impairment of assets (e.g. <a href="/facts/IAS_16/H2NRhYkx">IAS 16</a>) which seek to ensure that an entity's assets are not carried at more than their recoverable amount. In this context, stranded assets are also defined as an asset that has become obsolete or <a href="/facts/Non-performing_asset/kBMEogo0">non-performing</a>, but must be recorded on the balance sheet as a loss of profit.
</p>

Stranded asset open-in-new

Stranded asset