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Exposure Draft – Asset Retirement Obligations, Proposed Section PS 3280

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Mar 09, 2017

On March 9, 2017, the Public Sector Accounting Board (PSAB) issued an Exposure Draft that proposes a new standard on asset retirement obligations. Stakeholders are encouraged to submit their comments by June 15, 2017.

The main features of the Exposure Draft are as follows:

  • An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset.
  • 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.
  • Asset retirement costs associated with an asset no longer in productive use are expensed.
  • 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.
  • Asset retirement obligations include post-retirement operation, maintenance and monitoring.
  • A present value technique is often the best method with which to estimate the liability.

Review the Exposure Draft on the PSAB's Web site.

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