# ASC 405-980-55: Liabilities — Regulated Operations — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/405/980/#55-implementation-guidance-and-illustrations)

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## ASC 405-980-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/405/980/#55-implementation-guidance-and-illustrations)

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#### Implementation Guidance

##### [405-980-55-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-55-1)

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This paragraph provides guidance on implementing paragraph [980-405-25-1(b)](https://asc.understandingaccounting.org/asc/405/980/#405-980-25-1). A regulator may direct a regulated entity to include an amount for a contingency in allowable costs for rate-making purposes even though the amount does not meet the criteria in Subtopic 450-20 for recording. For example, a regulator may direct a regulated entity to include an amount for repairs of expected future uninsured storm damage. If a cost to repair storm damage is not subsequently incurred, the increased charges will have to be refunded to customers through future rate reductions. Accordingly, the regulated entity would recognize the amounts charged pursuant to such rates as liabilities rather than as revenues. If a cost to repair storm damage is subsequently incurred, the entity would charge that cost to expense and reduce the liabilities at that time by recognizing income in amounts equal to the cost.