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Section PS 3280 - Asset retirement obligations

Ef­fec­tive date:

Fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted.

Pub­lished by PSAB:

August 2018

 

Overview

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

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.

His­tory of Sec­tion PS 3280

Date

Development

Comments

August 2018

New Sec­tion

This new Sec­tion establishes standards on how to account for and report a liability for asset retirement obligations. It applies to fiscal years beginning on or after April 1, 2021. Earlier adoption is permitted

Note: The above summary does not include details of consequential amendments made as the result of other projects.

Correction list for hyphenation

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