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PSAB - Asset Retirement Obligations [ED]

Comment period ends on June 15, 2017

Proposed effective date:

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

Next steps

The PSAB expects to issue the final standard in Q3/2018

Last updated:

March 2018

Overview

The main features of the SOP, issued in August 2014, were as follows:

  1. retirement obligations associated with tangible capital assets result from legal, constructive and equitable obligations;
  2. 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;
  3. subsequent remeasurement 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; 
  4. retirement obligations associated with tangible capital assets include post-retirement operation, maintenance and monitoring;  and
  5. a present value technique is often the best method with which to estimate the liability.

The main features of the Exposure Draft are as follows:

  1. An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset.
  2. 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.
  3. Asset retirement costs associated with an asset no longer in productive use are expensed.
  4. 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.
  5. Asset retirement obligations include post-retirement operation, maintenance and monitoring.
  6. A present value technique is often the best method with which to estimate the liability.

 

Other developments

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.

 

Correction list for hyphenation

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