accounting-for-environmental

Perspectives

Understand the accounting requirements in ASC 410

On the Radar: Environmental and ARO accounting

Environmental obligations can arise from the improper operation, retirement, or closing of a facility at or near a contaminated site. An asset retirement obligation (ARO) is a legal obligation associated with the retirement of a tangible long-lived asset. This On the Radar edition gives guidance on the accounting requirements established for both in ASC 410-30 and ASC 410-20, respectively.

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Understanding environmental obligations and asset retirement obligations

Environmental obligations can arise from the improper operation, retirement, or closing, or from the current or former ownership, of a facility at or near a contaminated site. Entities that have incurred a legal obligation to remove or remediate pollution or contaminants from environmental media such as soil, sediment, groundwater, and surface water are required to recognize an environmental remediation liability in their financial statements.

An asset retirement obligation (ARO) is a legal or contractual obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, or normal operation of that long-lived asset.

The FASB has established specific guidance on accounting for environmental obligations and AROs in ASC 410.

On the Radar: Environmental Obligations and Asset Retirement Obligations

Liabilities and obligations

Continue your environmental obligations and asset retirement obligations learning

Deloitte’s Roadmap Environmental Obligations and Asset Retirement Obligations comprehensively discusses the recognition, measurement, presentation, and disclosure guidance in ASC 410-20 and ASC 410-30.

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Ashley Carpenter
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Deloitte & Touche LLP
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Deloitte & Touche LLP
+1 415 783 4915

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