This new Sec­tion es­tab­lishes stan­dards on how to ac­count for and re­port a li­a­bil­ity for as­set re­tire­ment oblig­a­tions. Please see, This site uses cookies to provide you with a more responsive and personalised service. At its meeting on March 22-23, 2018, the PSAB approved the final Handbook Section PS 3280, "Asset Retirement Obligations". Later winter 2017, PSAB will issue an exposure draft for a new accounting standard that addresses the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. An asset retirement obligation is a legal obligation associated with the retirement of a tangible capital asset. • Asset retirement obligations not related to contamination associated with entity’s Tangible Capital Asset (TCA) in productive or no longer in productive use (e.g. We've created the BDO Library as a "go to" source for informative and thought provoking knowledge resources. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. An asset retirement obligation (ARO) is an obligation to retire an asset or changes to assets according to contractual stipulation, for example, a leasing contract that gives the temporary right to use and change the leased object and requires that any changes are retired at the end of the lease. Section PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the “Board”) August 2018. Our professionals combine hands-on farm experience with strategic and financial insight. ASSET RETIREMENT OBLIGATIONS (ARO): A PRACTICAL APPROACH TO SECTION PS 3280 Section PS 3280, Asset Retirement Obligations, was issued by the Public Sector Accounting Standards Board (PSAB or the “Board”) August 2018. Slide 5 WHAT’S COMING? - The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. This change in financial reporting will require a substantial undertaking for all public sector organizations. BDO is the brand name for the BDO network and for each of the BDO Member Firms. Stakeholders are encouraged to submit their comments by June 15, 2017. That is, standards that apply to assets that are in productive use. In Brief and Podcast – Asset Retirement Obligations, Section PS 3280. An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. Since 1911, PSAB has represented the interests of boroughs and helped to shape the laws that laid their foundation. This year’s. The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. PSAB approved an Asset Retirement Obligations project. The main fea­tures of the Sec­tion are: An as­set re­tire­ment oblig­a­tion is a le­gal oblig­a­tion as­so­ci­ated with the re­tire­ment of a tan­gi­ble cap­i­tal as­set. At its meeting on September 26-27, 2016, the PSAB considered guidance to be included in an exposure draft to address various issues raised by respondents to the August 2014 Statement of Principles, “Retirement Obligations.” PSAB expects to review an exposure draft at its December 2016 meeting. PS 3280 Asset Retirement Obligations (New) August 2018 Effective for fiscal years beginning on or after April 1, 2021. Link copied Overview. It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date. The new Sec­tion PS 3280 applies to fis­cal years be­gin­ning on or af­ter April 1, 2021. component of net income in the PSAB handbook: on consolidation, other comprehensive income is reported as a component of the accumulated surplus/deficit; and c) the guidance in the CICA HB 4400 series relating to asset retirement obligations and interim financial statements has not been incorporated into the PS 4200 series. Fair value of a contributed tangible capital asset may be estimated using market or appraisal values. editorial changes have been made to other standards; and. Asset Retirement Obligation (ARO) Liability associated with the retirment of a tangible long-lived asset (discounted to PV of future cash flows) Asset Retirement Cost (ARC) The amount capitalized (asset) that inceases the carrying amount of the long-lived asset when an ARO is recognized. Jan 27, 2017. PS 3280 Asset Retirement Obligations (cont’d) Determining which standard should be applied Section PS 3280 Section PS 3260 Cause for the retirement or remediation obligation • Acquisition, construction, development, normal use. PSAB Asset Retirement Obligations (ARO) Standard - Resources PS 3280 is a new accounting standard covering asset retirement obligations (ARO) that was approved by PSAB in March 2018. Obtaining early understanding of this standard’s effects is important, as the impact on some public sector entities may be significant. Next Session: May 19th, 2020 at 1 PM ET. The primary objective of a Basis for Conclusions document is to set out how the Public Sector Accounting Board (PSAB) reached its conclusions. Subject AccountingLink. Given this standard is closely tied to Section PS 3280, Asset Retirement Obligations, the Board decided not to carry out a post-implementation review of Section PS 3260 at this time. The main fea­tures of the new Sec­tion are: For inquiries and feedback … Tools and Strategies to Facilitate PS 3280 Compliance (Asset Retirement Obligations) REGISTER HERE . In addition, PSAB is working on other new sections that will impact municipality financial reporting. All Related The entire disclosure for an asset retirement obligation and the associated long-lived asset. On August 1, 2018, new Section PS 3280 was issued to the PSA Handbook. The PSA Handbook is the primary authoritative source ... • Asset Retirement Obligations, Section PS 3280 April 1, 2022. The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. In July 2016, the staff updated this project to indicate that the PSAB now expects to issue an Exposure Draft in Q1/2017. MNP LLP accepts no responsibility: Release of PS 3280 Asset Retirement Obligations This communication contains a general overview of the topic and is current as of September 30, 2019. The standard must be applied by all public sector entities who prepare their financial statements under PSAB, including all Canadian municipalities. This new section is the only ARO standard to explicitly define buildings with asbestos as in scope. As of April 1, 2021, the new Public Sector Accounting Standard, PS 3280 goes into effect. Published on April 4, 2017. We have updated our Financial reporting developments publication on asset retirement obligations to further clarify and enhance our interpretative guidance. PS 3280 Asset Retirement Obligations. As of April 1, 2021, the new Public Sector Accounting Standard, PS 3280 goes into effect. Asset retirement obligations. hyphenated at the specified hyphenation points. Examples of what’s in: • Removal of Asbestos • Retirement of x-ray machines • Boilers • Leased site restoration • Landfill closure / post-closure Generally-accepted accounting standards (GAAP) require the company to include the present value of the expected (face value of) future decommissioning cost in the total acquisition cost of the asset. It's official - PSAB approved the final Handbook Section PS 3280, Asset Retirement Obligations late March 2018. Asset Retirement Obligations - PSAB’s exposure draft on ARO’s closed for comment June 15, 2017. Prior to this, the PSA Handbook did not include specific guidance on accounting for asset retirement obligations. Early adoption is permitted. ARO is a legal obligation associated with the retirement of a tangible capital asset. The project will address the reporting of legal obligations associated with the retirement of long-lived tangible capital assets currently in productive use. • Not necessarily associated with contamination. DTTL does not provide services to clients. The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. It was a logical progression for PSAB to consider whether standards were required for Asset Retirement Obligations (“AROs”). For example, certain obligations, such as nuclear decommissioning costs, generally are incurred as the ass et is operated. It is effective for fiscal years beginning on or after April 1, 2022 which means March 31, 2023 and December 31, 2023 will be the first year ends impacted. contained a new standard, ASSET RETIREMENT OBLIGATIONS, Section PS 3280. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. The main features of the new Section are: This Section applies to fiscal years beginning on or after April 1, 2021. The Public Sector Accounting Board (PSAB) asset retirement obligation section will have a significant impact on the public sector. Asset Retirement Obligations In March 2018, the Board issued new Section PS 3280 on asset retirement obligations. Public sector finance perspectives How to raise your game for disruptive changes ahead. This standard is intended to provide guidance, which does not currently exist in the Handbook, on accounting for Asset Retirement Obligations (AROs). FASB Statement no. Asset retirement obligations Learn about the new Asset Retirement Obligation standard PS 3280 and hear a discussion on what types of assets could be impacted by this new standard. Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. Public Sector Accounting Board (PSAB) – Update. This new section is the only ARO standard to explicitly define buildings with asbestos as in scope. Municipal councils have a vital role to play in setting the tone for a successful implementation and financial reporting success. Is your municipality ready to meet the requirements of this new standard for fiscal years beginning on or after April 1, 2021? An asset retirement obligation (ARO) initially should be measured at fair value and should be recognized at the time the obligation is incurred (provided that a reasonable estimate of fair value can be made). Asset retirement obligations essentially must be accounted for as follows. PS3280 Asset Retirement Obligations In August 2018, PSAB issued the new standard PS3280 on asset retirement obligations. How to adopt construction technology in a smart and minimally disruptive way. November 21, 2018. ACCOUNTING .06 Governments need to present information about the complete stock of their tangible capital assets and amortization in the summary financial statements to demonstrate stewardship and the cost of using those assets to deliver programs and provide services. Visit: https://www.farhatlectures.com To access resources such as quizzes, power-point slides, CPA exam questions, and CPA simulations. Read our status update o…, Learn more about manufacturers’ views and concerns from the latest BDO-sponsored CME Management Issues survey:…, Acting as an exclusive financial advisor to @, Financial benchmarking can help identify areas to improve for your farm. Discover why Brazil’s tax law’s alignment with OECD guidelines is a matter of when not if. PSAB approved an Asset Retirement Obligations project. 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. This section addresses the reporting of legal obligations associated with the retirement of certain tangible capital assets and solid waste landfill sites by public sector entities. See Legal for more information. 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. 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. It's official - PSAB approved the final Handbook Section PS 3280, Asset Retirement Obligations late March 2018. Entities recognize a liability for an asset retirement obligation when incurred if its fair value reasonably can be estimated. That is, standards that apply to assets that are in productive use. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. * Asset Retirement Obligations. Ear­lier adop­tion is per­mit­ted. contributed asset is considered equal to its fair value at the date of contribution. Our dedicated Private Equity Practice offer a full spectrum of services to help navigate today’s complex and global business environment. Publications Financial Reporting Developments. At its meeting on December 15-16, 2016, the PSAB approved an Exposure Draft, “Asset Retirement Obligations.” The document is expected to be issued in March 2017. Topics More topics. * ... What is the anticipated effect of the proposed standard on asset retirement obligations on your entity? On December 7, the Governmental Accounting Standards Board (GASB) issued guidance for state and local governments addressing liabilities known as “asset retirement obligations.” An asset retirement obligation (ARO) is a legally enforceable liability associated with the retirement of a tangible capital asset. The new standard requires all governments in Canada to identify and account for any assets that have an asset retirement obligation (ARO). BDO guides consumer businesses as they navigate the complexities of a rapidly evolving marketplace. Explanation. On March 9, 2017, the PSAB issued an Exposure Draft that proposes a new standard PS 3280 on asset retirement obligations. Official positions of PSAB are established only after extensive public due process. 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