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Perspectives

A roadmap to accounting for environmental obligations and asset retirement obligations

This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance on environmental obligations in ASC 410-30 and asset retirement obligations (AROs) in ASC 410-20. Because the accounting for environmental obligations and AROs will vary depending on the laws and regulations governing such obligations, this publication provides an overview of some of the applicable federal and state environmental laws and regulations in the United States and describes the application of the accounting guidance within the relevant legal framework.

We are pleased to present the 2020 edition of A Roadmap to Accounting for Environmental Obligations and Asset Retirement Obligations. The accounting for environmental obligations and asset retirement obligations (AROs) will vary depending on the laws and regulations governing such obligations. 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.

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. Because the guidance in ASC 410-30 addresses (albeit not exclusively) the application of federal and state environmental laws and regulations in the United States, this Roadmap provides an overview of some of those laws and regulations and describes the application of ASC 410-30 within the relevant legal framework.

Unlike many environmental remediation obligations, AROs typically arise as a result of state laws and asset-specific operating permits. This Roadmap describes the accounting requirements for AROs in ASC 410-20 and includes a discussion of certain relevant industry considerations within the context of the laws and regulations governing AROs for various industries.

1 For a list of the titles of standards and other literature referred to in this publication, see Appendix C. For a list of abbreviations used in this publication, see Appendix D.

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The Roadmap series contains comprehensive, easy-to-understand accounting guides on selected topics of broad interest to the financial reporting community.

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