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PSAB - Asset Retirement Obligations [Completed]

Effective date:

The new Sec­tion PS 3280 applies to fis­cal years be­gin­ning on or af­ter April 1, 2021. Ear­lier adop­tion is per­mit­ted.

Last updated:

August 2018

Overview

On August 1, 2018, new Section PS 3280 was issued to the PSA Handbook.

This new Section establishes standards on how to account for and report a liability for asset retirement obligations. The main features of the new Section are:

  • 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.
  • Measurement of a liability for an asset retirement obligation should result in the best estimate of the amount required to retire a tangible capital asset (or a component thereof) at the financial statement date.
  • 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.
  • A present value technique is often the best method with which to estimate the liability.

This Section applies to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted.

As a consequence of the issuance of Section PS 3280:

Section PS 3270 will remain in effect until the adoption of Section PS 3280 for fiscal periods beginning on or after April 1, 2021, unless a public sector entity elects earlier adoption.

 

Other developments

August 2018

On August 1, 2018, the PSAB issued the new standard, Section PS 3280, "Asset Retirement Obligations". They also released the Basis for Conclusions, which sets out how the PSAB reached its conclusions, and includes discussion of significant matters arising from comments received and issues raised in response to its proposals exposed.

January 2018

In January 2018, the PSAB staff updated this project to indicate that the PSAB expects to issue the final standard in Q3/2018.

November 2017

In November 2017, the PSAB staff updated this project to indicate that the PSAB expects to issue the final standard in Q2/2018.

March 2017

On March 9, 2017, the PSAB issued an Exposure Draft that proposes a new standard PS 3280 on asset retirement obligations. Stakeholders are encouraged to submit their comments by June 15, 2017.

July 2016

In July 2016, the staff updated this project to indicate that the PSAB now expects to issue an Exposure Draft in Q1/2017.

December 2015

In December 2015, the PSAB staff updated this project to advise that the Exposure Draft would be issued in Q3/2016.

August 2014

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.

 

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