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Typically, settlement of an asset retirement obligation is not required until the associated asset is retired. However, certain circumstances may exist in which partial settlement of an asset retirement obligation is required or performed before the asset is fully retired. The nature of asset retirement obligations in various industries is such that the obligations are not necessarily satisfied when the current operation or use of the asset ceases. These obligations can be settled during operation of the asset or after the operations cease. The timing of the ultimate settlement of a liability is unrelated to and should not affect its initial recognition in the financial statements provided the obligation is associated with the retirement of a tangible long-lived asset.
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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. If, as time progresses, it becomes apparent that retirement activities will not be required, the liability and the remaining unamortized asset retirement cost shall be reduced to zero.
","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. If, as time p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:80f9557103207bc798d77cdfa3d0d688696d2eb87602973fa6440853d925a154","downloaded_from":"2026-09-10T00:21:03.424Z","last_downloaded_at":"2026-09-10T00:21:03.424Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481908","source_sha256":"a27b525c4d0b1db049cb165a89cac4007434f249cd73c878dd6b44ca7ca6edbd"}},{"citation":"410-20-40-3","para":"40-3","html":"
Providing assurance that an entity will be able to satisfy its asset retirement obligation does not satisfy or extinguish the related liability. The effect of surety bonds, letters of credit, and guarantees is to provide assurance that third parties will provide amounts to satisfy the asset retirement obligations if the entity that has primary responsibility (the obligor) to do so cannot or does not fulfill its obligations. The possibility that a third party will satisfy the asset retirement obligations does not relieve the obligor from its primary responsibility for those obligations. If a third party is required to satisfy asset retirement obligations due to the failure or inability of the obligor to do so directly, the obligor would then have a liability to the third party.
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