Deloitte's Roadmap: Environmental Obligations and Asset Retirement Obligations

Environmental Obligations and Asset Retirement Obligations

This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance on environmental obligations in ASC 410-30 and asset retirement obligations (AROs) in ASC 410-20.

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Preface On the Radar Contacts Chapter 1 — Overview Chapter 2 — Environmental Regulations Chapter 3 — Accounting for Environmental Obligations Chapter 4 — Accounting for Asset Retirement Obligations Chapter 5 — Industry Considerations Related to Asset Retirement Obligations and Environmental Obligations Appendix A — Differences Between U.S. GAAP and IFRS Accounting Standards Appendix B — Environmental Literature Appendix C — Titles of Standards and Other Literature Appendix D — Abbreviations Appendix E — Roadmap Updates for 2022

The accounting for environmental obligations and asset retirement obligations (AROs) will vary depending on the laws and regulations governing such obligations. This Roadmap is intended to help entities address the impact of certain environmental and asset retirement laws and regulations on accounting for environmental obligations and AROs.

Environmental obligations are generally accounted for under ASC 410-30, whose recognition and disclosure guidance is principally based on the framework outlined by the guidance on loss contingencies in ASC 450-20. Because the guidance in ASC 410-30 addresses the application of federal and state environmental laws and regulations in the United States, this Roadmap provides an overview of some of those laws and regulations and describes the application of ASC 410-30 within the relevant legal framework.

AROs typically arise as a result of federal or state laws, contractual agreements, and asset-specific operating permits. This Roadmap describes the accounting requirements for AROs in ASC 410-20 and includes a discussion of certain relevant industry considerations within the context of the laws and regulations governing AROs for various industries.

The 2022 edition of this Roadmap includes updates on regulatory developments as well as On the Radar, a section that briefly summarizes emerging issues and trends related to the accounting and financial reporting topics addressed in the Roadmap. On the Radar is also available as a stand-alone publication.