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Chapter 4 — Foreign Currency Transactions

4.20 AROs and Environmental Remediation Liabilities

4.20 AROs and Environmental Remediation Liabilities

There is diversity in practice in the determination of whether an ARO or an environmental remediation liability is a monetary liability, a nonmonetary liability, or outside the scope of ASC 830 altogether. There is a presumption that such liabilities are denominated in an entity’s functional currency, unless the entity has entered into a binding agreement denominated in a foreign currency to settle the obligation or has a legal obligation to settle the obligation in a foreign currency. Therefore, such obligations would be outside the scope of ASC 830.