%PDF-1.4 %���� These liabilities may no longer be necessary or estimates of the amount and timing of future cash flows may need to change if the related asset has been damaged or destroyed. zPPE acquired in a swap is measured at fair value unless it lacks commercial substance Entities at the same time must recognize an offsetting asset retirement cost by increasing the carrying amount of the related long-lived asset. Environmental remediation obligations are generally accounted for under ASC 410-30,1 the recognition and disclosure guidance of which is generally based on the framework outlined by the guidance on loss contingencies in ASC 450-20. zDepreciation of PPE is to continue until the asset is derecognised, even during the period the asset is idle. zThe costs of dismantlement, removal or restoration should be included in the cost of property, plant and equipment. Taking action against systemic bias, racism, and unequal treatment, Key opportunities, trends, and challenges, Go straight to smart with daily updates on your mobile device, See what's happening this week and the impact on your business. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. View the active version (subscription required; updated as warranted). The accounting for environmental obligations and asset retirement obligations (AROs) will vary depending on the laws and regulations governing such obligations. ASC 410-10 simply provides information about the differences between the other two Subtopics on asset retirement obligations and environmental obligations. H�tWKsܸ��W��Y%��LNZg׵9m��i�DB#�r��ȫ������Ό\�Ҁx4�nt����͇��Ji��|�3����iR��(��R��}�:O����x����v�&U��~���? (�ai�6,�Fy�%m��&)�T��4IS�D:��p���I����d�� An Asset Retirement Obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset in which the timing or method of settlement may be conditional on a future event, the occurrence of which may not be within the control of the entity burdened by the obligation. Please enable JavaScript to view the site. 0��J�����p�eB]���0-�1�fx5;�o�85�ޫ��� �r� URWUy�'��$��'M� �H�:�|���CM�Y���9�^* ���q�����8e�{�43��酸�n��[�@�D(�x �:H�)�"��ؒԜA��>�{��y/3�7'�dX�� a[�G"�s����%�<={�S�^E}(�Pw� This Roadmap is intended to help entities address the impact of certain environmental and asset retirement laws and regulations on accounting for environmental obligations and AROs. Senior Manager, Climate Change & Sustainability Services at EY San Jose, California 500+ connections. In effect, ASC 410‐20 distinguishes between a contingency and an uncertainty. n��;�� ... member firms of Ernst & Young Global Limited, each of which is a separate legal entity. An asset retirement obligation is a legal obligation associated with the disposal or retirement of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. Asset Retirement Obligations ASC Topic 410, Asset Retirement Obligations, requires legal obligations associated with the retirement of long-lived assets to be recogni zed at fair value when incu rred and capitalized as part of the related long-lived asset, including asset retirement obligations where an obligation … 4 0 obj << /Type /Page /Parent 54 0 R /Resources 5 0 R /Contents 6 0 R /MediaBox [ 0 0 612 792 ] /CropBox [ 0 0 612 792 ] /Rotate 0 >> endobj 5 0 obj << /ProcSet [ /PDF /Text ] /Font << /TT2 64 0 R /TT4 63 0 R /TT6 46 0 R /TT8 47 0 R >> /ExtGState << /GS1 85 0 R >> /ColorSpace << /Cs6 67 0 R >> >> endobj 6 0 obj << /Length 5885 /Filter /FlateDecode >> stream It takes just a few minutes. Asset Retirement Obligation (ARO) Liability associated with the retirment of a tangible long-lived asset (discounted to PV of future cash flows) Asset Retirement Cost (ARC) The amount capitalized (asset) that inceases the carrying amount of the long-lived asset when an ARO is recognized. We have updated our Financial reporting developments publication on asset retirement obligations to further clarify and enhance our interpretative guidance. Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books.

asset retirement obligation ey 2021