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Future Accounting Standard Changes-Continued <br /> GASB Statement No.83-Certain Asset Retirement Obligations <br /> Summary <br /> This Statement addresses accounting and financial reporting for certain asset retirement obligations(AROs).An ARO is a legally <br /> enforceable liability associated with the retirement of a tangible capital asset.A government that has legal obligations to perform <br /> future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this <br /> Statement. <br /> This Statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding <br /> deferred outflow of resources for AROs.This Statement requires that recognition occur when the liability is both incurred and <br /> reasonably estimable.The determination of when the liability is incurred should be based on the occurrence of external laws, <br /> regulations,contracts,or court judgments,together with the occurrence of an internal event that obligates a government to <br /> perform asset retirement activities.Laws and regulations may require governments to take specific actions to retire certain <br /> tangible capital assets at the end of the useful lives of those capital assets,such as decommissioning nuclear reactors and <br /> dismantling and removing sewage treatment plants.Other obligations to retire tangible capital assets may arise from contracts or <br /> court judgments.Internal obligating events include the occurrence of contamination,placing into operation a tangible capital asset <br /> that is required to be retired,abandoning a tangible capital asset before it is placed into operation,or acquiring a tangible capital <br /> asset that has an existing ARO. <br /> This Statement requires the measurement of an ARO to be based on the best estimate of the current value of outlays expected to <br /> be incurred.The best estimate should include probability weighting of all potential outcomes,when such information is available <br /> or can be obtained at reasonable cost.If probability weighting is not feasible at reasonable cost,the most likely amount should be <br /> used. This Statement requires that a deferred outflow of resources associated with an ARO be measured at the amount of the <br /> corresponding liability upon initial measurement. <br /> This Statement requires the current value of a government's AROs to be adjusted for the effects of general inflation or deflation at <br /> least annually.In addition,it requires a government to evaluate all relevant factors at least annually to determine whether the <br /> effects of one or more of the factors are expected to significantly change the estimated asset retirement outlays.A government <br /> should remeasure an ARO only when the result of the evaluation indicates there is a significant change in the estimated outlays. <br /> The deferred outflows of resources should be reduced and recognized as outflows of resources(for example,as an expense)in a <br /> systematic and rational manner over the estimated useful life of the tangible capital asset. <br /> A government may have a minority share(less than 50 percent)of ownership interest in a jointly owned tangible capital asset in <br /> which a nongovernmental entity is the majority owner and reports its ARO in accordance with the guidance of another recognized <br /> accounting standards setter.Additionally,a government may have a minority share of ownership interest in a jointly owned <br /> tangible capital asset in which no joint owner has a majority ownership,and a nongovernmental joint owner that has operational <br /> responsibility for the jointly owned tangible capital asset reports the associated ARO in accordance with the guidance of another <br /> recognized accounting standards setter.In both situations,the government's minority share of an ARO should be reported using <br /> the measurement produced by the nongovernmental majority owner or the nongovernmental minority owner that has operational <br /> responsibility,without adjustment to conform to the liability measurement and recognition requirements of this Statement. <br /> In some cases,governments are legally required to provide funding or other financial assurance for their performance of asset <br /> retirement activities.This Statement requires disclosure of how those funding and assurance requirements are being met by a <br /> government,as well as the amount of any assets restricted for payment of the government's AROs,if not separately displayed in <br /> the financial statements. <br /> This Statement also requires disclosure of information about the nature of a government's AROs,the methods and assumptions <br /> used for the estimates of the liabilities,and the estimated remaining useful life of the associated tangible capital assets.If an ARO <br /> (or portions thereof)has been incurred by a government but is not yet recognized because it is not reasonably estimable,the <br /> government is required to disclose that fact and the reasons therefor.This Statement requires similar disclosures for a <br /> government's minority shares of AROs. <br /> Effective Date <br /> The requirements of this Statement are effective for reporting periods beginning after June 15,2018.Earlier <br /> application is encouraged. People <br /> +Process. <br /> Going <br /> Beyond the <br /> -13- � IIUIIlberS <br /> 79 <br />