1. Certain asset retirement obligations
Understanding gasb statement number 83

2. Certified continuing professional education class
2-hour credit
Must remain for the entirety of the class to receive CPE credit
Must sign in and sign out to receive CPE credit
Certificates of attendance will be ed for CPE credit

3. Certain asset retirement obligations (ARO’s)
Who/what are Governmental Accounting Standards Board (GASB) and Generally Accepted Accounting Principles (GAAP)?
Liability associated with tangible capital asset
Legally required to perform retirement actions
Recognize a liability
Reporting periods beginning June 15, 2018

4. What is GAAP? Proper accounting Decades of accounting practice
No authoritative book

5. What is GAAP? Does not account for every situation
Make the best choice
Rule makers leave room for options

6. What is GAAP? The grey area of materiality Qualitative aspects
Quantitative aspects

7. Who Sets Up GAAP? GASB sets the GAAP rules GASB provides:
Accounting principles
Interpretations
Guidance for implementation

8. GASB Statement No. 76 Category A Category B GASB Statements
GASB Technical Bulletins
GASB Implementation Guides
American Institute of Certified Public Accountants (AICPA) literature cleared by GASB

9. GASB Statement No. 76 If not Specified in Category A or B
AICPA literature not cleared by the GASB
Practices widely practiced by state and local government agencies
Literature from professional organizations, regulatory agencies, and authoritative accounting texts

10. timing and pattern of ARO liability recognition
GASB Statement No. 83

11. Liability both incurred and reasonably estimable
Occurrence of
Together with
External laws
Regulations
Legal binding contracts
Issuance of a court judgment
Governmental obligating internal event to perform asset retirement activities

12. Laws and regulations example
Requiring government asset retirement
Retire capital assets at end of useful lives
Decommissioning nuclear reactors
Dismantling and removing sewage treatment plants
Removal and disposal of x-ray machines

13. Internal obligating events example
Occurrence of contamination
Tangible capital asset placed in operation requiring retirement
Abandoning tangible asset before placed in operation
Acquiring a tangible asset that has an existing ARO

14. Legally required to perform retirement actions
GASB Statement No. 83

15. Retirement of a tangible capital asset encompasses
Its sale
Abandonment
Recycling
Disposal on some other manner

16. Legally enforceable liabilities associated with
Retirement of a tangible capital asset
Disposal of a replaced part that is a component of a tangible capital asset
Environmental remediation associated with the retirement of asset

17. Legally required to perform retirement actions
Current ARO’s value adjusted for inflation or deflation annually
Evaluate effects significantly changing the estimated asset retirement
Remeasure an ARO if there is a significant change in estimated outlays
Deferred outflows should be reduced and recognized as outflows (an expense)
Performed over the estimated useful life of the tangible capital asset

18. Depreciation

19. Depreciation
Matching revenues to expenses applied to long-lived assets not held for sale
Estimated life is the period of time an asset’s cost will be depreciated
Estimated life can be revised

20. Straight-line Depreciation
Cost – salvage value divided by estimated useful life (for example)
Asset costs $11,000 and has a salvage value of $1,000
Estimated life of five years
$11,000 - $1,000 divided by five years = $2,000 depreciation per year

21. Recognition of a deferred outflow of resources
GASB Statement No. 83

22. Recognition of a deferred outflow of resources
Recognize a corresponding deferred outflow when ARO is recognized
If asset is permanently abandoned before its in operation

23. Initial measurement of an ARO
GASB Statement No. 83

24. Initial measurement of an ARO
Determine types of legally required activities
Estimate the current value of outlays expected to be incurred
Equipment, facilities, and services for example
Estimate potential outcomes of reasonable costs when sufficient evidence is available
Include potential for higher or lower outcomes

25. Minority share in jointly owned asset
GASB Statement No. 83

26. Minority share in jointly owned asset
Less than 50% ownership interest with a nongovernment majority owner
Nongovernment owner reports the ARO in another set of standards
No majority owner with a nongovernment minority owner having operational responsibility
Government reports using the measurement produced by nongovernment owner

27. provide funding or financial assurance for asset retirement
GASB Statement No. 83

28. provide funding or financial assurance for asset retirement
Disclosure of how it’s being met by government
Amount of restricted assets for payment of the government ARO’s
Can be listed separately in financial statements to avoid disclosure

29. More disclosure information
GASB Statement No. 83

30. More disclosure information
Nature of a government’s ARO’s
Methods and assumptions used for the estimates of the liabilities
Estimated remaining useful life

31. More disclosure information
Incurrence of an ARO not yet recognized because it is not reasonably estimable
Disclose that fact and reasons therefor
Similar disclosures for a minority share of ARO’s

32. Effective Beginning June 15, 2018
Earlier application is encouraged

33. Improving financial reporting
Enhances comparability of financial statements among governments
Establishes criteria to recognize and measure ARO’s
May have not been previously reported
Enhance decision-usefulness for financial statement users
Requiring disclosures related to those ARO’s

34. NextGen Fixed Assets

35. Adding an Asset
County of Anywhere
County of Anywhere

36. Adding an Asset

37. Adding an Asset

38. Adding an Asset

39. Adding an Asset

40. Adding an Asset
County of Anywhere

41. Adding an Asset

42. Assets

43. Assets
County of Anywhere

44. Assets
County of Anywhere
County of Anywhere

45. Assets

46. Assets

47. Assets

48. Depreciation Process

49. Depreciation Process

50. Depreciation Process
County of Anywhere

51. Depreciation Process
County of Anywhere

52. Depreciation Process
County of Anywhere

53. Reports

54. Reports

55. Reports

56. Reports

57. Questions?