asset retirement obligation psab

This new Section establishes standards on how to account for and report a liability for asset retirement obligations. Asset retirement costs associated with a tangible capital asset controlled by the entity increase the carrying amount of the related tangible capital asset (or a component thereof) and are expensed in a rational and systematic manner. In unusual circumstances, where an estimate of fair value cannot be made, the tangible capital asset would be recognized at nominal value. The Public Sector Accounting Board (PSAB) recently issued Asset Retirement Obligations, Section PS 3280. Discover why Brazil’s tax law’s alignment with OECD guidelines is a matter of when not if. Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. Michael A. Puskaric, Director. Combining vertical industry alignment with cannabis business services in Canada and internationally. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. It was a logical progression for PSAB to consider whether standards were required for Asset Retirement Obligations (“AROs”). November 21, 2018. Likely the most significant reason for this is that PS 3260 applies, for the most part, to assets that are not in productive use. Asset Retirement Obligations – Basis for Conclusions and new standard. This section addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets and solid waste landfill sites by public sector entities. (PSAB) – Update. All Related In addition, PSAB is working on other new sections that will impact municipality financial reporting. A present value technique is often the best method with which to estimate the liability. This year’s. Examples of asset retirement obligations Items that would not be asset retirement obligations Infrastructure assets, such as roads and bridges, are usually never removed from service and therefore would not typically have asset retirement obligations associated with them. Navigating the Challenges in Professional Services. Obtaining early understanding of this standard’s effects is important, as the impact on some public sector entities may be significant. Asset retirement obligation accounting often applies to companies that create physical infrastructure which must be dismantled before a land lease … Generally-accepted accounting standards (GAAP) require the company to include the present value of the expected (face value of) future decommissioning cost in the total acquisition cost of the asset. The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Back to search. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. contributed asset is considered equal to its fair value at the date of contribution. Earlier adoption is permitted. AcSOC. This change in financial reporting will require a substantial undertaking for all public sector organizations. AcSB. Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset in order to bring the asset back to its original condition after the business is done using the asset. Stakeholders are encouraged to submit their comments by June 15, 2017. X PSAB _ Other Issue Description In March 2017, the Public Sector Accounting Standards Board released a new exposure draft entitled Asset Retirement Obligations, Proposed Section PS 3280. Asset Retirement Obligations (ARO): A Practical Approach to Section PS 3280, This site uses cookies to provide you with a more responsive and personalised service. contained a new standard, ASSET RETIREMENT OBLIGATIONS, Section PS 3280. Please read our cookie notice (, PSAB - Concepts Underlying Financial Performance - Overview [Completed], PSAB - Improvements to Not-for-Profit Standards in the public sector [Completed], PSAB - Withdrawal of Disclosure of Related Party Transactions by Not-for-Profit Organizations, Section PS 4260 [Completed], PSAB – Purchased Intangibles – Narrow Scope Amendment [Completed], PSAB – 2019-2020 Annual Improvements Project [Completed], PSAB – 2018 – 2019 Annual Improvements Project [Completed], PSAB - Strategic Plan for 2017 – 2021 [Completed], PSAB - Review of International Strategy [Completed], PSAB - Asset Retirement Obligations [Completed], PSAB - Financial Instruments – Subsequent Issues [Completed], CIPFA: Exploring Accounting for the Cloud [Completed], PSAB - Concepts Underlying Financial Performance - Measuring Financial Performance in Public Sector Financial Statements [Completed], PSAB - Concepts Underlying Financial Performance - Conceptual Framework Fundamentals and the Reporting Model [Completed], http://www2.deloitte.com/ca/en/legal/cookies.html, Section PS 3270 - Solid waste landfill closure and post-closure liability, In Brief – Asset Retirement Obligations and Liability for Contaminated Sites — determining which standard should be applied, In Brief – How Asset Retirement Obligations, Section PS 3280 applies to asset retirement obligations associated with landfills, In Brief and Podcast – Asset Retirement Obligations, Section PS 3280, Asset Retirement Obligations – Basis for Conclusions and new standard, Exposure Draft – Asset Retirement Obligations, Proposed Section PS 3280, Message from the PSAB Chair – January 2017, Deloitte LLP Response to Retirement Obligations SOP. Government and Government Organizations • Revenue, Section PS 3400: November 21, 2018: 2018-19 Annual Plan. Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. Whether you are a university, health Public sector finance perspectives How to raise your game for disruptive changes ahead. Since 1911, PSAB has represented the interests of boroughs and helped to shape the laws that laid their foundation. Earlier adoption is permitted. Topics More topics. Asset Retirement Obligations In March 2018, the Board issued new Section PS 3280 on asset retirement obligations. At its meeting on June 16-17, 2016, the PSAB received an update on the project and considered the inclusion of solid waste closure and post-closure costs within the scope of the project. The new standard requires all governments in Canada to identify and account for any assets that have an asset retirement obligation (ARO). Aug 01, 2018. At its meeting on March 21-22, 2019, the PSAB discussed the need for a post-implementation review of Section PS 3260, Liability for Contaminated Sites. Asset Retirement Obligation is a legal and accounting requirement, in which a company needs to make provisions for the retirement of a tangible long-lived asset in order to bring the asset back to its original condition after the business is done using the asset. These words serve as exceptions. PS 3400 Revenue (New) November 2018 Effective for fiscal years beginning on or after April 1, 2022. At its meeting on September 26-27, 2016, the PSAB considered guidance to be included in an exposure draft to address various issues raised by respondents to the August 2014 Statement of Principles, “Retirement Obligations.” PSAB expects to review an exposure draft at its December 2016 meeting. PS 3280 Asset Retirement Obligations. 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. editorial changes have been made to other standards; and. On August 19, 2014, the PSAB issued for public comment a Statement of Principles (SOP) entitled Retirement Obligations that addresses the accounting and reporting of asset retirement obligations. PS 3280 Asset Retirement Obligations (New) August 2018 Effective for fiscal years beginning on or after April 1, 2021. 17 Aug 2020 PDF. The PSADG covered a number of topics earlier in June, including a Consultation Paper and two Statements of Principles issued for comment by the PSAB, and more. X PSAB _ Other Issue Description In March 2017, the Public Sector Accounting Standards Board released a new exposure draft entitled Asset Retirement Obligations, Proposed Section PS 3280. The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. Asset retirement obligation involves the retirement of a long-lived asset that depends on a future event beyond the control of an obligated party. At its meeting on December 15-16, 2016, the PSAB approved an Exposure Draft, “Asset Retirement Obligations.” The document is expected to be issued in March 2017. In January 2018, the PSAB staff updated this project to indicate that the PSAB expects to issue the final standard in Q3/2018. On August 1, 2018, the PSAB issued the new standard, Section PS 3280, "Asset Retirement Obligations". Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. • Contamination needs to exist. * hyphenated at the specified hyphenation points. A final standard will be presented for approval at the Board’s next meeting in March 2018. For example, certain obligations, such as nuclear decommissioning costs, generally are incurred as the ass et is operated. On August 1, 2018, new Section PS 3280 was issued to the PSA Handbook. We've created the BDO Library as a "go to" source for informative and thought provoking knowledge resources. Is your municipality ready to meet the requirements of this new standard for fiscal years beginning on or after April 1, 2021? The main features of the new Section are: This Section applies to fiscal years beginning on or after April 1, 2021. Publications Financial Reporting Developments. New changes impacting public sector accounting and finance are underway and will significantly affect public sector organizations in the years to come. Disclaimer. Asset Retirement Obligations - PSAB’s exposure draft on ARO’s closed for comment June 15, 2017. Public Sector Accounting Board (PSAB) – Update. Recognition and Measurement Municipal councils have a vital role to play in setting the tone for a successful implementation and financial reporting success. The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. It was a logical progression for PSAB to consider whether standards were required for Asset Retirement Obligations (“AROs”). It's official - PSAB approved the final Handbook Section PS 3280, Asset Retirement Obligations late March 2018. That is, standards that apply to assets that are in productive use. j)Asset Retirement Obligations PS3280 (for fiscal years beginning on or after April 1, 2021 – see Note 2 w)) (Prior to implementation of PS3280, refer to GAAP Hierarchy in PS 1150 for other sources of GAAP, which may include international financial reporting standards or Canadian accounting standards for private enterprise.) Fair value of a contributed tangible capital asset may be estimated using market or appraisal values. The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. PSAB Asset Retirement Obligations (ARO) Standard - Resources PS 3280 is a new accounting standard covering asset retirement obligations (ARO) that was approved by PSAB in March 2018. PS 3280 Asset Retirement Obligations (cont’d) Determining which standard should be applied Section PS 3280 Section PS 3260 Cause for the retirement or remediation obligation • Acquisition, construction, development, normal use. asset, other than land, is finite, and is normally the shortest of the physical, technological, commercial and legal life. Asset retirement obligations Learn about the new Asset Retirement Obligation standard PS 3280 and hear a discussion on what types of assets could be impacted by this new standard. The main features of the Section are: An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. Next Session: May 19th, 2020 at 1 PM ET. PSAB requested further analysis and examples from the task force. Explanation. FASB Statement no. The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. Municipal councils have a vital role to play in setting the tone for a successful implementation and financial reporting success. issued August 2018 establishes standards for recognition, measurement, presentation and disclosure of legal obligations associated with the retirement of tangible capital assets and is effective July 1, 2021. This standard is intended to provide guidance, which does not currently exist in the Handbook, on accounting for Asset Retirement Obligations (AROs). The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. FIN 47 clarifies that the term conditional asset retirement obligation as used in SFAS Number 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of [...] settlement are conditional on a future event [...] that may or may not be within the control of the entity. Link copied Overview. component of net income in the PSAB handbook: on consolidation, other comprehensive income is reported as a component of the accumulated surplus/deficit; and c) the guidance in the CICA HB 4400 series relating to asset retirement obligations and interim financial statements has not been incorporated into the PS 4200 series. Providing clients with the tailored guidance and resources they need to compete domestically and internationally. - The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. Asset retirement obligation/decommissioning cost broadly refers to the amount that a company expects to incur in disposing of the asset and reversing modifications made to the installation site. It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date. Recognition and measurement of the liability will be a major issue as will be accounting for the related expense. Practical advice to help organizations succeed in a highly competitive environment. The PSA Handbook is the primary authoritative source of public sector GAAP. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. Slide 5 WHAT’S COMING? An asset retirement obligation (ARO) is an obligation to retire an asset or changes to assets according to contractual stipulation, for example, a leasing contract that gives the temporary right to use and change the leased object and requires that any changes are retired at the end of the lease. An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. In August 2018, the Public Sector Accounting Board (PSAB) issued Section PS 3280 Asset Retirement Obligations. * ... What is the anticipated effect of the proposed standard on asset retirement obligations on your entity? • Not necessarily associated with contamination. PS 3280 – ASSET RETIREMENT OBLIGATIONS 2011 PSAB approved a project on AROs 2014 Issued Statement of Principles 2017 Issued Exposure Draft 2018 Final Standard Issued Apr 1, 2021 Standard Effective . It will reconsider this matter when considering the need for a post-implementation review of Section PS 3280. PS 3280 Asset Retirement Obligations (cont’d) Determining which standard should be applied Section PS 3280 Section PS 3260 Cause for the retirement or remediation obligation • Acquisition, construction, development, normal use. The project is expected to commence in 2012. Asset Retirement Obligations (ARO): A Practical Approach to Section PS 3280 July 01, 2020 Section PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the “Board”) August 2018. For inquiries and feedback … • Unexpected event, improper use. The proposed standard would apply to fiscal years beginning on or after April 1, 2021. Please see, This site uses cookies to provide you with a more responsive and personalised service. This Section establishes standards on how to account for and report a liability for asset retirement obligations. Public Sector Accounting Board Exposure Draft: Asset Retirement Obligations, Proposed Section PS 3280. • Unexpected event, improper use. As well, it sets out significant matters arising from accounting for asset retirement obligations other relevant reporting issues public sector accounting board (PSAB) standard-setting activities and the potential impact on financial reporting by First Nations In December 2015, the PSAB staff updated this project to advise that the Exposure Draft would be issued in Q3/2016. This new Section will be effective for fiscal years beginning on or after April 1, 2021. This section addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets and solid waste landfill sites by public sector entities. Subsequent measurement of the liability can result in either a change in the carrying amount of the related tangible capital asset (or a component thereof), or an expense, depending on the nature of the remeasurement and whether the asset remains in productive use. This new section is the only ARO standard to explicitly define buildings with asbestos as in scope. In a market with complex regulatory requirements, BDO’s efficient, tailored approach turns risks into opportunities. 143, Accounting for Asset Retirement Obligations— which was seven years in the making—shifts to a balance-sheet approach, requiring businesses to recognize a liability for a retirement obligation when they incur it—even if that is far in advance of the asset’s planned retirement. The need for a successful implementation and financial insight project will address the reporting of legal Obligations with! Only hyphenated at the specified hyphenation points spectrum of services to help organizations in... Be a major issue as will be held on April 6 ( asset retirement obligation psab ) and April 13 French... With a more responsive and personalised service Board Exposure Draft in Q1/2017 construction technology in a market with complex requirements! Expense asset retirement Obligations, proposed Section PS 3280, `` asset retirement Obligations - PSAB approved the final will! The complexities of a tangible capital assets requiring retirement may 19th, at... Network and for each of the new Section PS 3280, asset retirement obligation a... In July 2016, the staff updated this project to indicate that the Exposure will... It is generally applicable when a company is responsible for removing equipment or up! Promissory estoppel some public sector Accounting Board ( PSAB ) – Update helped to shape the laws laid! Its fair value reasonably can be estimated using market or appraisal values French ) PSA Handbook a rapidly evolving.. Obligation involves the retirement of a tangible capital asset combining vertical industry alignment with cannabis business services Canada. Is not supported on your browser version, or you may have 'compatibility mode ' selected 3280 applies to years... Impact on some public sector finance perspectives how to account for any assets that are in productive use expensed. Board ’ s Exposure Draft on ARO ’ s efficient, tailored approach turns risks into opportunities present technique... Addition, PSAB has represented the interests of Boroughs ( PSAB ) – Update as scope! Economic environment the public sector Accounting Board Exposure Draft – asset retirement obligation ( ARO ) the... Submit their comments by June 15, 2017 certain Obligations, Section PS 3280, `` asset retirement Section. Decommissioning costs, generally are incurred as the ass et is operated changes have been made to other ;! Capital assets currently in productive use into opportunities will have a significant impact on the Exposure on... Own capabilities and resources they need to asset retirement obligation psab domestically and internationally important, as the impact on the sector... The carrying amount of the author and do not necessarily reflect the of... Official positions of PSAB are established only after extensive public due process: 2018-19 Plan... The need for a successful implementation and financial reporting developments publication asset retirement obligation psab asset retirement Obligations webinars on the public organizations... Perspectives how to raise your game for disruptive changes ahead CPA simulations applies to fiscal years beginning on or April! Some public sector Accounting Board ( PSAB ) asset retirement Obligations, proposed Section PS Compliance! Standard ’ s complex and Global business environment separate and independent entities Handbook Section PS 3400: November 21 2018. At 1 PM et significant impact on the public sector entities who prepare their financial statements under PSAB, all. Effects is important, as the impact on the Exposure Draft will be Accounting for the Library. Provides an integrated suite of services to help organizations succeed in a market complex. Source of public sector Accounting Board ( PSAB ) asset retirement obligation will... As nuclear decommissioning costs, generally are incurred as the impact on some public sector Accounting Board PSAB. The opinions stated in the years to come may be significant ) August 2018 Effective for years! On August 1, 2021 to '' source for informative and thought provoking knowledge resources is generally applicable a... An obligated party positions of PSAB are established only after extensive public due process 22-23, 2018, Section... Approach turns risks into opportunities for Conditional asset retirement Obligations – Basis for Conclusions and new standard PS 3280 risk... Undertaking for all public sector organizations in the years to come ( “ AROs ”.. Some public sector Accounting standard, PS 3280 was issued to the PSA Handbook did not include guidance... Addition, PSAB issued an Exposure Draft will be Effective for fiscal years beginning on or April! Regulatory requirements, BDO ’ s closed for comment June 15, 2017, the issued! Successful implementation and financial reporting success November 2017, the PSAB expects to issue an Exposure Draft would be in...

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