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<br />-21- <br />ACCOUNTING AND AUDITING UPDATES <br /> <br />GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS <br /> <br />This statement addresses accounting and financial reporting for certain asset retirement obligations <br />(ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset. <br /> <br />This statement establishes criteria for determining the timing and pattern of recognition of a liability and a <br />corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform <br />future asset retirement activities related to its tangible capital assets should recognize a liability when it is <br />both incurred and reasonably estimable. The measurement of an ARO is required to be based on the best <br />estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources <br />associated with an ARO is required to be measured at the amount of the corresponding liability upon <br />initial measurement. <br /> <br />This statement requires the current value of a government’s AROs to be adjusted for the effects of general <br />inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually <br />to determine whether the effects of one or more of the factors are expected to significantly change the <br />estimated asset retirement outlays. A government should remeasure an ARO only when the result of the <br />evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources <br />should be reduced and recognized as outflows of resources in a systematic and rational manner over the <br />estimated useful life of the tangible capital asset. <br /> <br />If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental <br />entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s <br />minority share of an ARO should be reported using the measurement produced by the nongovernmental <br />majority owner or the nongovernmental minority owner that has operational responsibility, without <br />adjustment to conform to the liability measurement and recognition requirements of this statement. <br /> <br />The statement also requires disclosures of any funding or financial assurance requirements a government <br />has related to the performance of asset retirement activities, along with any assets restricted for the <br />payment of the government’s AROs. This statement also requires disclosure of information about the <br />nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and <br />the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portions <br />thereof) has been incurred by a government but is not yet recognized because it is not reasonably <br />estimable, the government is required to disclose that fact and the reasons therefor. This statement <br />requires similar disclosures for a government’s minority shares of AROs. <br /> <br />The requirements of this statement are effective for reporting periods beginning after June 15, 2018. <br />Earlier application is encouraged. <br /> <br />GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES <br /> <br />This statement establishes criteria for identifying fiduciary activities of all state and local governments. <br />The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary <br />activity, and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included <br />to identify fiduciary component units and post-employment benefit arrangements that are fiduciary <br />activities.