{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/410/20/#35-subsequent-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"410","topic_title":"Asset Retirement and Environmental Obligations","subtopic":"410-20","subtopic_title":"Asset Retirement Obligations","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Allocation of Asset Retirement Cost","paragraphs":[{"citation":"410-20-35-1","para":"35-1","html":"
A liability for an asset retirement obligation may be incurred over more than one reporting period if the events that create the obligation occur over more than one reporting period. Any incremental liability incurred in a subsequent reporting period shall be considered to be an additional layer of the original liability. Each layer shall be initially measured at fair value. For example, the liability for decommissioning a nuclear power plant is incurred as contamination occurs. Each period, as contamination increases, a separate layer shall be measured and recognized. Paragraph 410-20-30-1 provides guidance on using that technique.
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An entity shall subsequently allocate that asset retirement cost to expense using a systematic and rational method over its useful life. Application of a systematic and rational allocation method does not preclude an entity from capitalizing an amount of asset retirement cost and allocating an equal amount to expense in the same accounting period. For example, assume an entity acquires a long-lived asset with an estimated life of 10 years. As that asset is operated, the entity incurs one-tenth of the liability for an asset retirement obligation each year. Application of a systematic and rational allocation method would not preclude that entity from capitalizing and then expensing one-tenth of the asset retirement costs each year.
","snippet":"An entity shall subsequently allocate that asset retirement cost to expense using a systematic and rational method over its useful life. Application of a systematic and rational allocation method does not preclude an ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1bf4a352f5ba7333ee0a71fd28a486a2de91836972928bfeda378b4c10415aae","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"citation":"410-20-35-3","para":"35-3","html":"
In periods subsequent to initial measurement, an entity shall recognize period-to-period changes in the liability for an asset retirement obligation resulting from the following:
  1. a
    The passage of time
  2. b
    Revisions to either the timing or the amount of the original estimate of undiscounted cash flows.
","snippet":"In periods subsequent to initial measurement, an entity shall recognize period-to-period changes in the liability for an asset retirement obligation resulting from the following:\n(a) The passage of time\n(b) Revisions to …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a1608a19451bcbfc7627cc4ce969d6fe1f7c019d815ce3c0ba955ff76e70920b","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"citation":"410-20-35-4","para":"35-4","html":"
An entity shall measure and incorporate changes due to the passage of time into the carrying amount of the liability before measuring changes resulting from a revision to either the timing or the amount of estimated cash flows.
","snippet":"An entity shall measure and incorporate changes due to the passage of time into the carrying amount of the liability before measuring changes resulting from a revision to either the timing or the amount of estimated cash…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fda83f12913c37c10f2e6ba960b5e7983c0e5f89bf8155f37b13483e65f85a84","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"citation":"410-20-35-5","para":"35-5","html":"
An entity shall measure changes in the liability for an asset retirement obligation due to passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. The interest rate used to measure that change shall be the credit-adjusted risk-free rate that existed when the liability, or portion thereof, was initially measured. That amount shall be recognized as an increase in the carrying amount of the liability and as an expense classified as accretion expense. Paragraph 835-20-15-7 states that accretion expense related to exit costs and asset retirement obligations shall not be considered to be interest cost for purposes of applying Subtopic 835-20.
","snippet":"An entity shall measure changes in the liability for an asset retirement obligation due to passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. The i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0081be01f4b00812c95c65f9fd015ec2df6b32405952e932a69384ef760fc1c","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"citation":"410-20-35-6","para":"35-6","html":"
The subsequent measurement provisions require an entity to identify undiscounted estimated cash flows associated with the initial measurement of a liability. Therefore, an entity that obtains an initial measurement of fair value from a market price or from a technique other than an expected present value technique must determine the undiscounted cash flows and estimated timing of those cash flows that are embodied in that fair value amount for purposes of applying the subsequent measurement provisions. Example 1 (see paragraph 410-20-55-31) provides an illustration of the subsequent measurement of a liability that is initially obtained from a market price. (See paragraph 410-20-25-14 for a discussion on conditional outcomes.)
","snippet":"The subsequent measurement provisions require an entity to identify undiscounted estimated cash flows associated with the initial measurement of a liability. Therefore, an entity that obtains an initial measurement of fa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2ccd9c61e79ae5cbd6b0f53856292b8bb7e1be1b92c894ab00d896b8dd8a1de9","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"citation":"410-20-35-7","para":"35-7","html":"
Paragraph 410-20-25-14 explains how uncertainty surrounding conditional performance of a retirement obligation is factored into its measurement by assessing the likelihood that performance will be required. As the time for notification approaches, more information and a better perspective about the ultimate outcome will likely be obtained. Consequently, reassessment of the timing, amount, and probabilities associated with the expected cash flows may change the amount of the liability recognized. See paragraphs
410-20-55-18 through 55-19
.
","snippet":"Paragraph 410-20-25-14 explains how uncertainty surrounding conditional performance of a retirement obligation is factored into its measurement by assessing the likelihood that performance will be required. As the time f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6752011be3a47fa27880ecea715a111016a889b8340635a8cc7e5b72520f4328","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7786cf2f6ce556869d9e612b50e808d89abd19c0c9e769f448a6740df5cef3b8","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"block":null,"heading":"Change in Estimate","paragraphs":[{"citation":"410-20-35-8","para":"35-8","html":"
Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows shall be recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. Upward revisions in the amount of undiscounted estimated cash flows shall be discounted using the current credit-adjusted risk-free rate. Downward revisions in the amount of undiscounted estimated cash flows shall be discounted using the credit-adjusted risk-free rate that existed when the original liability was recognized. If an entity cannot identify the prior period to which the downward revision relates, it may use a weighted-average credit-adjusted risk-free rate to discount the downward revision to estimated future cash flows. When asset retirement costs change as a result of a revision to estimated cash flows, an entity shall adjust the amount of asset retirement cost allocated to expense in the period of change if the change affects that period only or in the period of change and future periods if the change affects more than one period as required by paragraphs
250-10-45-17 through 45-20
for a change in estimate.
","snippet":"Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows shall be recognized as an increase or a decrease in the carrying amount of the liability for an asset retir…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16a768788bdd40e75a260251046ef0029ef7ee6024b815bf7325d96817c50f78","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:270e0b9b4909aef99259308d58ffd00d61a1c3e9c0d5bfcf15922a16c0ab0953","downloaded_from":"2026-09-10T00:20:59.316Z","last_downloaded_at":"2026-09-10T00:20:59.316Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481937","source_sha256":"63a6123c656f700b0a1e7b8e5f1d6c5ba8103fc3314665c49d37e7624e783b45"}},{"block":null,"heading":"Effects of Funding and Assurance Provisions","paragraphs":[{"citation":"410-20-35-9","para":"35-9","html":"
Methods of providing assurance include surety bonds, insurance policies, letters of credit, guarantees by other entities, and establishment of trust funds or identification of other assets dedicated to satisfy the asset retirement obligation. The existence of funding and assurance provisions may affect the determination of the credit-adjusted risk-free rate. For a previously recognized asset retirement obligation, changes in funding and assurance provisions have no effect on the initial measurement or accretion of that liability, but may affect the credit-adjusted risk-free rate used to discount upward revisions in undiscounted cash flows for that obligation.
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