Asset Retirement Obligations

BACKGROUND

A new accounting standard that addresses the reporting of legal obligations associated with the retirement of tangible capital assets is required.

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Reporting guidance on asset retirement obligations was covered in the pre-changeover accounting standards in Part V of the CPA Canada Handbook – Accounting. There is not yet specific accounting guidance in this area in the CPA Canada Public Sector Accounting (PSA) Handbook. Government organizations transitioning to the PSA Handbook would need guidance in this area.

This project will address the recognition, measurement, presentation and disclosure of legal obligations associated with retirement of tangible capital assets.

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PROJECT NEWS

In Brief – Asset Retirement Obligations, Section PS 3280
October 17, 2018. PSAB’s new standard on Asset Retirement Obligations was issued in August 2018. Read this plain and simple overview on this new standard, which addresses the accounting and reporting of legal obligations associated with the retirement of tangible capital assets.

In Brief Podcast – Asset Retirement Obligations, Section PS 3280
October 17, 2018. Hear Kim MacPherson, Chair of PSAB’s Asset Retirement Obligations Task Force, give a plain and simple overview of this new standard via this easy-to-understand, four-minute podcast. Section PS 3280 becomes effective on or after April 1, 2021.

Basis for Conclusions – Asset Retirement Obligations
August 1, 2018. This document sets out how the Board reached its conclusions, and includes discussion of significant matters arising from comments received and issues raised in response to its proposals exposed.

PSAB Decision Summary – March 22-23, 2018
The Board approved the final Handbook Section PS 3280, Asset Retirement Obligations. This new Section will be effective for fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted.

PSAB Decision Summary – December 14-15, 2017
The Board reviewed the comments to the Exposure Draft, “Asset Retirement Obligations, Proposed Section PS 3280,” and gave feedback. A final standard will be presented for approval at the Board’s next meeting in March 2018.

Exposure Draft – Asset Retirement Obligations, Proposed Section PS 3280
March 9, 2017. PSAB has issued an Exposure Draft that proposes a new standard on asset retirement obligations. Stakeholders are encouraged to submit their comments, on the form provided, by June 15, 2017.

Webinar – Explore PSAB’s Exposure Draft on Asset Retirement Obligations
February 3, 2017. Tune in to this webinar on April 6, 2017 (English) or April 13, 2017 (French) to learn about PSAB’s new Exposure Draft on asset retirement obligations. We outline proposals regarding recognition, measurement, presentation and disclosure of obligations associated with the retirement of tangible capital assets.

PSAB Decision Summary – December 15-16, 2016
PSAB approved an Exposure Draft, “Asset Retirement Obligations.” The document is expected to be issued in March 2017.

PSAB Decision Summary – September 26-27, 2016
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.

PSAB Decision Summary – June 16-17, 2016
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. PSAB requested further analysis and examples from the task force.

PSAB Decision Summary – March 23-24, 2016
PSAB received an update on the project, including consideration of the accounting for the asset retirement costs and provided feedback to the task force.

Statement of Principles – Retirement Obligations
August 19, 2014. PSAB has issued a Statement of Principles that addresses the accounting and reporting of retirement obligations associated with tangible capital assets controlled by a public sector entity. Stakeholders are encouraged to submit their comments, on the form provided, by November 21, 2014.

PSAB  Decision Summary – June 16-17, 2014
PSAB reviewed a draft statement of principles, “Retirement Obligations,” and requested that the document clarify the difference between retirement and replacement or renewal of tangible capital assets.

PSAB approved the following proposed principles:

  • Retirement obligations associated with tangible capital assets include those resulting from legal, constructive and equitable obligations.
  • Retirement costs increase the carrying amount of the related tangible capital asset or a component thereof and are expensed in a rational and systematic manner.
  • Retirement obligations would be measured using best estimate methodologies.
  • Subsequent remeasurement of the retirement obligation liability 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.
  • Retirement obligations associated with tangible capital assets include post-retirement operation, maintenance and monitoring.

PSAB Decision Summary – March 20-21, 2014
PSAB provided feedback to its task force on the scope and recognition proposals. PSAB will continue its deliberation on other proposals in a draft statement of principles at the June 2014 meeting.

PSAB December 15-16, 2011 Decision Summary
PSAB approved an Asset Retirement Obligations project.  The project is expected to commence in 2012.  The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use.  Recognition and measurement of the liability will be a major issue as will be accounting for the related expense.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.