Section PS 3280 - Asset retirement obligations

Ef­fec­tive date:

Fiscal years beginning on or after April 1, 2022. 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

November 2020

Deferral of Section PS 3280 due to Covid-19

The effective date of the standard has been deferred by one year from April 1, 2021, to April 1, 2022.

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.