GASB issues guidance on asset retirement obligations

By Neil Amato

GASB issued guidance Wednesday for state and local governments to address asset retirement obligations related to tangible capital assets.

Statement No. 83, Certain Asset Retirement Obligations, sets guidance for determining the timing and pattern of recognition for liabilities and corresponding deferred outflow of resources related to asset retirement obligations.

The dismantling and removal of a sewage plant and the decommissioning of a nuclear reactor are examples of where capital assets might need to be retired.

A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets is required under the guidance to recognize a liability and a corresponding outflow of resources. The guidance also identifies circumstances that trigger recognition of such transactions.

The guidance would enhance comparability of financial statements among governments by establishing uniform criteria for governments to recognize and measure certain asset retirement obligations, GASB said.

“This statement establishes clear and consistent accounting and financial reporting guidance for certain asset retirement obligations, where little guidance existed before for state and local governments,” GASB Chairman David A. Vaudt said in a news release. “This will result in increased certainty in application for governments, enhanced consistency in financial reporting, and more meaningful information for users of financial statements.”

GASB approved an exposure draft a year ago and received responses from 29 organizations and individuals during the comment period.

The requirements are effective for reporting periods beginning after June 15, 2018.

Neil Amato (namato@aicpa.org) is a JofA senior editor.

SPONSORED REPORT

Tax reform complicates year-end tax planning

Get your clients ready for tax season with these year-end tax planning strategies, which address how to make the most of recent tax law changes, such as the new deduction for qualified business income and the cap on the deductibility of state and local taxes.

VIDEO

What RPA is and how it works

Robotic process automation is like an Excel macro that can work on multiple applications, says Danielle Supkis Cheek, CPA. RPA can complete routine, repetitive tasks such as data entry, freeing up employee time from lower-level chores.