# ASC 410-30-55: Asset Retirement and Environmental Obligations — Environmental Obligations — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/410/30/#55-implementation-guidance-and-illustrations) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:137bd075e23331fb748c781475ac8f698c082a27822dad4eb11e0605563fa005 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 410-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/410/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [410-30-55-1](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:93764f947c72590e5b4155dd89684b0a103e1fbc4fe5fad3fc0efd9fe896a9d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance illustrates paragraphs [410-30-30-10 through 30-11](https://asc.understandingaccounting.org/asc/410/30/#410-30-30-10) . Examples of incremental direct costs of the remediation effort include the following: 1. a Fees to outside law firms for work related to determining the extent of [remedial actions](https://asc.understandingaccounting.org/glossary/r/#remedial-action "Related to Superfund: generally long-term actions taken to do any of the following: Investigate, alleviate, or eliminate the effects of a release of a hazardous substance into the environment Investigate, alleviate, or eliminate a threat of the release of an existing hazardous substance that could potentially harm human health or the environment Restore natural resources. Also refers to corrective action under the Resource Conservation and Recovery Act of 1976.") that are required, the type of remedial actions to be used, or the allocation of costs among potentially responsible parties 2. b Costs related to completing the [remedial investigation-feasibility study](https://asc.understandingaccounting.org/glossary/r/#remedial-investigation-feasibility-study "Extensive technical studies conducted by the government or by the potentially responsible parties to investigate the scope of site impacts and determine the remedial alternatives that, consistent with the National Contingency Plan, may be implemented at a Superfund site. Government-funded remedial investigation-feasibility studies do not recommend a specific alternative for implementation. Remedial investigation-feasibility studies conducted by potentially responsible parties usually do recommend and technically support a remedial alternative. A remedial investigation-feasibility study may include a variety of on- and off-site activities, such as monitoring, sampling, and analysis.") 3. c Fees to outside engineering and consulting firms for site investigations and the development of remedial action plans and remedial designs 4. d Costs of contractors performing remedial actions 5. e Governmental oversight costs and past costs; usually this is based on the cost incurred by the Environmental Protection Agency or other governmental authority dealing with the site 6. f The cost of machinery and equipment that is dedicated to the remedial actions and that does not have an alternative use 7. g Assessments by a potentially responsible party group covering costs incurred by the group in dealing with a site 8. h Costs of operation and maintenance of the remedial action, including the costs of postremediation monitoring required by the remedial action plan. ##### [410-30-55-2](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:b9ceb176393a769c7c12431801a53ae5e60bcc9aed1d1911e1e81b7791927a0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of employees who may devote a significant amount of time directly to the remediation effort include the following: 1. a The internal legal staff that is involved with the determination of the extent of remedial actions that are required, the type of remedial action to be used, and the allocation of costs among potentially responsible parties 2. b Technical employees who are involved with the remediation effort. ##### [410-30-55-3](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:1450a78f59e1527f13892c4e182e2066c2acec9e193201b00acb134908824828 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of the compensation and benefits costs to be incurred for a specific site should be made in connection with the initial recording of the remediation liability and subsequently adjusted at each reporting date to reflect the current estimate of such costs to be incurred in the future. ##### [410-30-55-4](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:f391428044aff026c7ead787d73855c4304fc723157686f3d2a83e75170b414e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are numerous ways to allocate liabilities among potentially responsible parties. The four principal factors considered in a typical allocation process are the following: 1. a Elements of fair share. Examples are the amount of waste based on volume; the amount of waste based on mass, type of waste, toxicity of waste; the length of time the site was used. 2. b Classification of potentially responsible party. Examples are site owner, site operator, transporter of waste, generator of waste. 3. c Limitations on payments. This characteristic includes any statutory or regulatory limitations on contributions that may be applicable to a potentially responsible party. For example, in the reauthorization of the Comprehensive Environmental Response, Compensation, and Liability Act, it has been proposed that the statute limit the contribution of a municipality to 10 percent of the total remediation liability, irrespective of the municipality's allocable share. 4. d Degree of care. This refers to the degree of care exercised in selecting the site or in selecting a transporter. ##### [410-30-55-5](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:e0dcb60eb5679c02da3eedd23fb3f09f1e249d769f4ada68bbcb3dbd014176ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Potentially responsible parties may reach an agreement among themselves as to the allocation method and percentages to be used, they may hire an allocation consultant whose conclusions may or may not be binding, or they may request a nonbinding allocation of responsibility from the Environmental Protection Agency. The allocation method or percentages used may change as the remediation project moves forward. An agreement to reallocate the preliminarily allocated liability at the end of the remediation project may exist, or the allocation percentages may be adjusted during the project to reflect prior allocations that subsequently are agreed to have been inequitable. This implementation guidance illustrates paragraph [410-30-30-1](https://asc.understandingaccounting.org/asc/410/30/#410-30-30-1). ##### [410-30-55-6](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:fa29e7177481c9dd217c82c9370a062234c300a26fc8b93905b7f66a6d50fb2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses the criterion in paragraph [410-30-30-19(b)](https://asc.understandingaccounting.org/asc/410/30/#410-30-30-19) involving the dependency of the timing of the recovery on the timing of the payment of the liability. That criterion would usually be met, for example, if an insurance entity agrees, in accordance with the terms of an insurance contract, to reimburse the reporting entity for all or a percentage of the remediation costs incurred by the reporting entity as the reporting entity expends money to satisfy its obligation. That criterion likely would not be met, for example, in a lump-sum buyout by an insurance entity of contested coverage. #### Illustrations ##### [410-30-55-7](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:67426dd7173d0c55aaca8ef7bcaff6f6ec7dac5d9f4ef38e8a896f501c97325c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates application of the disclosure requirements of Subtopic 275-10. ##### [410-30-55-8](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:83b6bb442910ca0e9b2f5d2df66b4a1b93446455722e74164ca31387322a53ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ace Oil Company is a distributor of heating oil with four storage and distribution facilities located in Anystate. Federal, state, and local laws and regulations govern the operation of the entity's facilities. The entity has determined that, beginning in the coming year, a significant number of its storage tanks and a significant amount of its other equipment will need to be removed, replaced, or modified to satisfy regulations that go into effect in varying stages over the next seven years. In addition, the entity has a present obligation to decontaminate the soil in the near term at its largest facility. ##### [410-30-55-9](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:4f26b220b43d0f6248664839eee1c2f1355cde73f50ff70475fa25f1b3df702b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity hired a consultant to evaluate the technological, regulatory, and legal factors involved. Based on the consultant's findings, the entity estimated that total environmental expenditures over the next 7 years related to the tanks and equipment will aggregate approximately $5 million. Of this amount, approximately $4.75 million represents capital expenditures, which are expected to be recoverable through operations. The existing tanks have a net book value of $500,000, and the equipment has a net book value of $475,000. The cost of soil decontamination is estimated to be at least $1 million, which is material to the entity's operations, and may be as high as $3 million. Exposure to legal liability to third parties is considered remote. ##### [410-30-55-10](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:5ace42384dbccdbd47a76a846c49d822790669b18772773e5c1107754fdc0385 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The consultant has demonstrated substantial experience with similar sites, and the technical aspects of upgrading storage facilities and decontaminating soil appear to be fairly straightforward. ##### [410-30-55-11](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:eebf4f11559ce12089bee58f3322cdb6e4649b4899a78a494b979513b6144781 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity would disclose the following. (The italicized text illustrates the voluntary disclosure that is encouraged by paragraph [275-10-50-9](https://asc.understandingaccounting.org/asc/275/10/#275-10-50-9).) - The entity will begin a project to decontaminate the soil at its Anytown, Anystate facility in the coming year. The entity estimates the cost of decontamination to total at least $1 million and has accrued that amount as an operating expense in the current year. The ultimate cost, however, _will depend on the extent of contamination found as the project progresses and_ may be as much as $3 million. The entity expects decontamination to be substantially completed within one year. ##### [410-30-55-12](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:68c9227ac1c2fad0b41ee40d5bf50b7906de9546b472c2bd28c05d96cdcf5a10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This disclosure informs financial statement users of the existence of the soil contamination problem at the financial statement date and indicates that the liability is susceptible to change in the near term. This Subtopic does not require disclosure of the capital commitment because it is not a present obligation for which an estimate is reflected in the entity's financial statements. ##### [410-30-55-13](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:70e3e29fb4f25f04571c510d6d6f8016baef5e74718bb7411affc04925deba97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although, in this Example, the near-term nature of the possible change is indicated by a statement that the entity expects decontamination to be substantially completed within one year, an expectation that decontamination will take more than one year to complete would not preclude the estimate from being susceptible to near-term change. In such cases, the disclosure could be worded to specifically refer to the near term. ##### [410-30-55-14](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:48a3ef8903c1b4350d778595cebda91d2af8cd4e424a4da2a8191e2ce42cbe5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [410-30-50-4](https://asc.understandingaccounting.org/asc/410/30/#410-30-50-4) for accounting policies note disclosure for environmental remediation-related costs (information that is enclosed in brackets is not required). - Environmental Remediation Costs—\[Entity A accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change.\] Costs of future expenditures for environmental remediation obligations are not discounted to their present value. \[Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.\] ##### [410-30-55-15](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:f2d237330ebf527fe0a293b157debf7f710f9e9c2091b069cb2fd3926dabb992 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [410-30-50-10](https://asc.understandingaccounting.org/asc/410/30/#410-30-50-10) for disclosure for a situation in which all of the following conditions exist: 1. a An entity is involved in a single environmental site at which a number of potential outcomes may occur. 2. b There is a probable, reasonably estimable recovery from a third party. 3. c The entity has accrued for the most likely outcome within a range of possible outcomes for each component. 4. d The nature of the amounts accrued for remediation and the related probable recovery are necessary to be disclosed in order for the financial statements not to be misleading. 5. e There is a reasonably possible loss exposure in excess of the amount accrued that is material and it is reasonably possible that a change in estimate that would be material to the financial statements will occur in the near term. ##### [410-30-55-16](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:065b56da365866424244f16103b36c1185a78c73344e4640056f079c58202224 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity would make the following disclosure (information that is enclosed in brackets is not required). - Entity A has been notified by the Environmental Protection Agency that it is a potentially responsible party under Superfund legislation \[with respect to XYZ site in Sometown, USA, a [disposal](https://asc.understandingaccounting.org/glossary/d/#disposal "Related to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and the Resource Conservation and Recovery Act of 1976: under the Resource Conservation and Recovery Act of 1976, the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including groundwaters. Similarly under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 with regard to hazardous substances.") site previously used in its chemical-fertilizer business. The Environmental Protection Agency has also identified 10 other potentially responsible parties for XYZ. A remedial investigation and feasibility study has been completed, and the results of that study have been forwarded to the Environmental Protection Agency. The study indicates a range of viable remedial approaches, but agreement has not yet been reached with the Environmental Protection Agency on the final remediation approach. The potentially responsible party group has preliminarily agreed to an allocation that sets Entity A's share of the cost of remediating XYZ site at 6 percent.\] Entity A has accrued its best estimate of its obligation with respect to the site at December 31, 199X, \[which is $10 million and which is included in long-term liabilities and is expected to be disbursed over the next 10 years. If certain of the potentially responsible parties are ultimately not able to fund their allocated shares or the Environmental Protection Agency insists on a more expensive remediation approach,\] Entity A could incur additional obligations of up to $7 million. It is reasonably possible that Entity A's recorded estimate of its obligation may change in the near term. - With respect to the environmental obligation discussed above, the site was acquired in 1982, and, in connection with that acquisition, the former owner partially indemnified Entity A for environmental impacts occurring before the acquisition. \[Based on existing documentation indicating the years in which the business shipped wastes to XYZ and the terms of the indemnification in the acquisition agreement,\] Entity A \[believes it is probable that it will recover from the prior owners 50 percent of its allocated remediation costs for XYZ and, accordingly,\] has recorded a receivable of $5 million at December 31, 199X. ##### [410-30-55-17](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:5858210fc8a03c6c7532e22eb14741404bd70eb1bdb23dee8d2cca461eaf0266 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [410-30-50-11](https://asc.understandingaccounting.org/asc/410/30/#410-30-50-11). An entity would make the following disclosure of a probable but not yet reasonably estimable environmental remediation loss contingency (information that enclosed in brackets is not required). - Entity A has been notified by the Environmental Protection Agency that it is a potentially responsible party with respect to environmental impacts \[identified at the XYZ site in Sometown, USA. Several meetings have been held with the Environmental Protection Agency and the other identified potentially responsible parties, and a remedial investigation has recently commenced\]. Although a loss is probable, it is not possible at this time to reasonably estimate the amount of any obligation for remediation \[of XYZ site\] that would be material to Entity A's financial statements \[because the extent of environmental impact, allocation among the potentially responsible parties, remediation alternatives (which could involve no or minimal efforts), and concurrence of the regulatory authorities have not yet advanced to the stage where a reasonable estimate of any loss that would be material to the entity can be made\]. \[A reasonable estimate of a material obligation, if any, is expected to be possible in 199X.\] ##### [410-30-55-18](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:29a095bbec79ce0ec7e66fa30ea57274ca6f8eb83e4b5b6b7c89b01abe60db57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases illustrate the guidance in paragraphs [410-30-25-16 through 25-19](https://asc.understandingaccounting.org/asc/410/30/#410-30-25-16) : 1. a Tanker oil spill (Case A) 2. b Rusty chemical storage tank (Case B) 3. c Air pollution caused by manufacturing activities (Case C) 4. d Lead pipes in office building that contaminate drinking water (Case D) 5. e Soil contamination caused by an operating garbage dump (Case E) 6. f Water well contamination (Case F) 7. g Underground gasoline storage tank leak (Case G) 8. h Air in office building contaminated with asbestos fibers (Case H). ##### [410-30-55-19](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:2bb759466f2f9768cce5d83933f9d0c621c39b605d00e966fb97d86d99c12214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A67CDE38-469D-437C-BED9-054049B027CF-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Tanker Oil Spill: A. Clean up waterway and beachfront 1. Costs to clean up the waterway and beachfront are not eligible for consideration under the first criterion because the oil company does not own the property. 2. The cleanup of the waterway and beachfront does not mitigate or prevent a future oil spill from future operations. "3. The waterway and beachfront are not owned assets and, therefore, the third criterion does not apply." Conclusion: Costs incurred for cleanup and restoration in connection with the oil spill should be charged to expense. B. Reinforce tanker's hull to reduce risk of future spill 1. Reinforcing the hull improves the tanker's safety compared to when the tanker was originally constructed or acquired. 2. Reinforcing the hull mitigates the risk that the tanker will experience a similar oil spill during future operations and improves the tanker's safety compared to when the tanker was originally constructed or acquired. Conclusion: The costs incurred in connection with reinforcing the tanker's hull may be capitalized under either the first or second criterion. ##### [410-30-55-20](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:d23626895390d0acdda36dff8cc78dcc1f469824a3f95e35bf2eeeb08b517417 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-2FACBCC3-9DC1-4D7D-9D90-F9F394492B56-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Rusty Chemical Storage Tank: A. Remove rust that developed during ownership 1. Removing the rust has not improved the tank compared with its condition when built or acquired. "2. Removing the rust has mitigated the possibility of future leaks. However, removing the rust has not improved the tank compared with its condition when built or acquired." Conclusion: Rust removal costs should be expensed unless the tank is currently held for sale and the costs were incurred to prepare the tank for sale. B. Apply rust prevention chemicals 1. The application of rust prevention chemicals has improved the tank's condition compared with its condition when built or acquired. 2. Rust prevention chemicals mitigate the possibility that future rust will cause leaks and also improve the tank's condition compared with its condition when built or acquired. Conclusion: The costs of applying the rust prevention chemicals may be capitalized under either the first or second criterion. ##### [410-30-55-21](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:659d4de0b4db7d98af3c146eeef75dd10c2ae6905ffde67cfce0d7131b1d68c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-6071CD53-BEF9-400A-913B-741A5E7146EE-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Air Pollution Caused by Manufacturing Activities: A. Acquire and install pollution control equipment 1. The pollution control equipment improves the safety of the plant compared with its condition when built or acquired. 2. The pollution control equipment mitigates or prevents air pollution that has yet to occur but that may otherwise result from future operation of the plant and improves the safety of the plant compared with its condition when built or acquired. Conclusion: Costs associated with acquisition and installation of the pollution control equipment may be capitalized under either the first or second criterion. B. Pay fines for violations of the Clean Air Act "1. Payment of fines does not extend the plant's life, increase its capacity, or improve its efficiency or safety." 2. Payment of fines does not mitigate or prevent pollution that has yet to occur but that may otherwise result from future operation of the plant. "Conclusion: Fines paid in connection with violations of the Clean Air Act should be charged to expense. Even if the plant is currently held for sale, the fines should be charged to expense because the costs would not have been incurred to prepare the plant for sale." ##### [410-30-55-22](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:fb90a4995493b0c60f3b1b440ca52ab44d19d7f0c62cd90c92adf2ead06453ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-90D05D26-FC6D-4AB8-AA55-CAB17654695F-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Lead Pipes in Office Building Contaminate Drinking Water: A. Remove lead pipes and replace with copper pipes 1. Removing the lead pipes has improved the safety of the building's water system compared with its condition when the water system was built or acquired. "2. By removing the lead pipes, the building's owner eliminated an existing environmental problem and prevented any further contamination from that lead. However, by removing the existing pipes, the building's owner has not mitigated or prevented environmental problems yet to occur, if any, from future operation of the building." Conclusion: Costs to remove the lead pipes and install copper pipes may be capitalized under the first criterion. The book value of the lead pipes should be charged to expense when removed. ##### [410-30-55-23](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:2acb44ab5e0854a6c6a806ae54b6d7810be0e74fbb67c357fc6102091ebf3822 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E0F66C38-937F-462D-B9BD-476924BA3532-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Soil Contamination Caused by an Operating Garbage Dump: A. Refine soil on dump property "1. The life of a garbage dump is not extended by refining its soil. Further, the condition of the soil after refining will not be improved over its condition when the garbage dump was constructed or acquired. Removal of the toxic waste restores the soil to its original uncontaminated condition." "2. Removal of toxic waste from the soil addresses an existing environmental concern. It also prevents that waste from leaching in the future. However, removing the waste does not mitigate or prevent future operations from creating future toxic waste. The risk will continue regardless of how much of the existing soil is refined." Conclusion: Soil refinement costs should be charged to expense unless the garbage dump is currently held for sale and the costs were incurred to prepare the garbage dump for sale. B. Install liner "1. The liner does not extend the useful life or improve the efficiency or capacity of the garbage dump. However, the liner has improved the garbage dump's safety compared to when the dump was constructed or acquired." "2. The liner addresses an existing and potential future problem. In this example, the garbage dump contains toxic waste from past operations and will likely generate toxic waste during future operations. The liner partly addresses the existing environmental problem by preventing future leaching of existing toxic waste into the soil. The liner also mitigates or prevents leaching of toxic waste that may result from garbage dumping in future periods and has improved the garbage dump's safety compared to when the dump was constructed or acquired." Conclusion: The liner may be capitalized under either the first or second criterion. ##### [410-30-55-24](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:a51348fdd01930ed3a637f0673bcfbb0e39fc86a79b78ce7c46e6fc8473f2cc5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-77E76A25-182C-4E38-8770-7EC30590D7AD-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Water Well Contamination Caused by Chemicals That Leaked into Wells Containing Water That Will Be Used in Future Beer Production: A. Neutralize water in wells "1. The treatment does not extend the life of the wells, increase their capacity, or improve efficiency. The condition of the water is not safer after the treatment compared to when the wells were initially acquired." "2. By neutralizing the water, the possibility of future contamination of the wells from future operations has not been mitigated or prevented." Conclusion: Costs incurred to neutralize well water should be charged to expense unless the wells were held for sale and the costs were incurred to prepare the wells for sale. B. Install water filters 1. The water filters improve the safety of the wells compared with their uncontaminated state when built or acquired. "2. The water filters address future problems that may result from future operations. Since the water filters are effective in filtering environmental contamination, they mitigate the effect of spilling new contaminants into the wells during future operations. In addition, the water filters represent an improvement compared with the wells' original condition without water filters." Conclusion: The water filtering system may be capitalized under either the first or the second criterion. ##### [410-30-55-25](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:01a420b3d1e29574733332a614578e4ff93527ba33d9094a139046d4d2611b9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-141702FC-2F92-441B-AEB2-0CD6CB155267-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Underground Gasoline Storage Tanks Leak and Contaminate the Company's Property: A. Refine soil "1. Soil refinement does not extend the useful life, increase the capacity, or improve the efficiency or safety of the land relative to its unpolluted state when acquired." "2. By refining the contaminated soil, the oil company has addressed an existing problem. However, the company has not mitigated or prevented future leaks during future operations." Conclusion: Soil refining costs should be charged to expense unless the property is currently held for sale and the costs were incurred to prepare the property for sale. B. Encase tanks so as to prevent future leaks from contaminating surrounding soil "1. In some cases, encasement may increase the life of the tanks because of their increased resistance to corrosion, leaking, etc. In other situations, the treatment may not increase the life of the tanks. However, the encasement has improved the tanks' safety compared with their condition when built or acquired." "2. Encasement has mitigated or prevented future leakage and soil contamination that might otherwise result from future operations. In addition, the encasement has improved the tanks' safety compared with their condition when built or acquired." Conclusion: The cost of encasement may be capitalized under either the first or the second criterion. ##### [410-30-55-26](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:feb8fd8880e02710f6e98f22e7e7b443a8545b4b5c9be45bd8640a4bbd95ae69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table provides a summary for determining whether costs to treat environmental contamination should be capitalized or charged to expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-12702794-D3EF-451C-954A-75998ED7E0A3-low.gif) "Environmental Contamination, Treatments" Evaluation of Criteria Air in Office Building Contaminated with Asbestos Fibers: A. Remove asbestos 1. Removal of the asbestos improves the building's safety over its original condition since the environmental contamination (asbestos) existed when the building was constructed or acquired. "2. By removing the asbestos, the building's owner has eliminated an existing problem and has prevented any further contamination from that asbestos. However, by removing the existing asbestos, the building's owner has not mitigated or prevented new environmental problems, if any, that might result from future operation of the building." Conclusion: Asbestos removal costs may be capitalized as a betterment under the first criterion. ##### [410-30-55-27](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:7cf05d329ee7729a9ef72122fa3acbbb787991b434cfa62efd8b753e4069b420 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the recognition and measurement guidance provided in Sections 410-30-25 and 410-30-30; it does not illustrate all disclosure requirements set forth in this Subtopic. ##### [410-30-55-28](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:0c606a5e6185c40c19f8a6f70b62ec2e483ae617535334ef8109c876478adcaa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prior to 1980, the XYZ Manufacturing Company contracted with a state-licensed waste hauling contractor to remove specified, nonhazardous solid and liquid industrial waste from one of its plants for disposal off-site at a state-licensed disposal facility. A purchase order was let, and the work was performed. The contractor complied with all applicable laws and regulations, and monthly reports were filed with appropriate state environmental agencies. ##### [410-30-55-29](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:e230ea093d366c4cf9595300c9bf6d91b44f9a6f0ccbeeb758b1fe7fa2fa20a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 1986, the entity received an information request from the Environmental Protection Agency pursuant to section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. The information request stated that the Environmental Protection Agency believed that hazardous substances at a site, now listed by the Environmental Protection Agency on its National Priorities List, were generated at XYZ's plant. XYZ was named as a potentially responsible party and was directed by the Environmental Protection Agency, under penalty of law, to search its records exhaustively and answer a series of questions possibly implicating it directly to the site, or indirectly by its having used one or more transporters the Environmental Protection Agency said it was also investigating. ##### [410-30-55-30](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:836683f8dbd80c9aced449933ff2317f64017262d5536ce8f549f760f033ea1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. XYZ searched its records as directed and determined late in 1986 that it had, in fact, contributed hazardous substances to the site. XYZ could not, however, determine how significant the hazardous substances it had sent to the site were in relation to the total population of hazardous substances at the site. The minimum remediation cost, including a minimum amount of legal fees, that XYZ was able to estimate was not material to its financial statements. XYZ was able, however, to determine that it was reasonably possible that its ultimate liability could be material. ##### [410-30-55-31](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:86968cb3cbb4350db18d47555e59f785995ad1fa477c4cb1050dadfdc10ab70c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 1987 the Environmental Protection Agency identified a number of waste generators, transporters, and site owner-operators as likely potentially responsible parties. The identified potentially responsible parties were invited to a meeting at which government lawyers requested that one or more of the potentially responsible parties voluntarily perform a remedial investigation-feasibility study to evaluate existing site conditions (including a public health and ecological risk assessment) and to develop a proposed array of remedial alternatives from which the Environmental Protection Agency would select a remedy and demand that it be implemented. Standardized Environmental Protection Agency terms and conditions, stipulated penalty provisions, and indeterminate scope of work elements inhibited voluntary agreement among the potentially responsible parties, and so a [consent decree](https://asc.understandingaccounting.org/glossary/c/#consent-decree "A legal document, approved by a judge, that formalizes an agreement reached between the Environmental Protection Agency and potentially responsible parties through which potentially responsible parties will conduct all or part of a remedial action at a Superfund site; cease or correct actions or processes that are polluting the environment; or otherwise comply with regulations where potentially responsible parties' failure to comply caused the Environmental Protection Agency to initiate regulatory enforcement actions. The consent decree describes the actions potentially responsible parties will take and may be subject to a public comment period.") was not achieved. ##### [410-30-55-32](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:b838b14b0e5e6b865422b91c84101db48c19dfcee162e32803f7b1b3baee36a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 1988 the Environmental Protection Agency asserted the existence of "imminent and substantial endangerment" at the site early in 1988 under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act, and it issued a [unilateral administrative order](https://asc.understandingaccounting.org/glossary/u/#unilateral-administrative-order "Order issued unilaterally by the Environmental Protection Agency under section 106(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 to potentially responsible parties, or to nonpotentially responsible parties such as adjacent landowners, requiring them to take a response action. Unilateral administrative orders contain findings of fact and conclusions of law, and they specify the work to be performed and the Environmental Protection Agency's right to take over the work in the event of noncompliance, inadequate performance, or an emergency. A unilateral administrative order does not allocate conduct required by the order between individual potentially responsible parties; however, the Environmental Protection Agency may issue carve-out orders requiring individual potentially responsible parties to perform specific actions. Also referred to as a section 106 order.") to the potentially responsible party with the deepest pockets—XYZ—to undertake the remedial investigation-feasibility study. ##### [410-30-55-33](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:b2236694759a85e5adafae224944db0bd2e226eda4d99ceab5a1cc9a483ded60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because triple damages are authorized under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act, XYZ agreed to conduct the remedial investigation-feasibility study specified in the order and demanded that other identified potentially responsible parties participate in the effort. XYZ initially estimated the cost that would be incurred to perform the remedial investigation-feasibility study to be between $1 million and $2 million. Based on the limited information that was available about the site, information that XYZ had about its contribution to the site, and the number and financial condition of other potentially responsible parties, XYZ initially estimated that its ultimate share of this cost would prove to be in the range of 20 percent to 50 percent. XYZ also estimated that it would incur legal costs related to the remediation effort of $200,000 to $2 million in addition to any legal costs that might be incurred by any potentially responsible party group that might be formed. No amounts within any of these ranges were considered to be better estimates than any other amounts within any of these ranges. Because of a lack of information about the type and extent of the remediation effort that could be required, no range of cost of the overall remediation effort could be developed at this time. ##### [410-30-55-34](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:1915dc2a1cad20f4fc97ce0842f96375e6c629a5edd24fface8f2c8eb9513bf2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under threat of a contribution lawsuit by XYZ, a potentially responsible party group was formed late in 1988. The potentially responsible party group had the following three objectives: 1. a To implement the requirements of the unilateral administrative order in the most cost-effective and scientifically valid way 2. b To raise money and allocate costs among the potentially responsible parties willing to perform the work based on the types and relative quantities of wastes shipped to the site or another agreed-upon formula 3. c To recover costs from nonparticipating potentially responsible parties, if possible. ##### [410-30-55-35](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:18d5921923b9871dd79b3cacc3935d24d98c77536db7cee2a0e19ed4c2eba6d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the lack of a good data base of factual information upon which to make sound allocation decisions agreeable to all, outside arbitration was used in 1989 to allocate fair share costs among participating potentially responsible parties. The arbitrator preliminarily apportioned 65 percent of the costs for the site to the four participating potentially responsible parties, as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-906E4D43-3AD4-4BE7-A9B8-713A224D9A14-low.gif) XYZ 20% Potentially responsible party No. 2 20 Potentially responsible party No. 3 15 Potentially responsible party No. 4 10 65% Orphan share 25 Recalcitrant share 10 100% ##### [410-30-55-36](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:64a8c2a97a9329a86f1fda0c1e3d00c76f8705555222657081240659b98811cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Twenty-five percent of the site was determined to be the [orphan share](https://asc.understandingaccounting.org/glossary/o/#orphan-share "Equitable share of liability for response or remediation costs attributed to orphan-share potentially responsible parties, or the amount by which the equitable share of liability for response or remediation costs attributable to other parties exceeds the amount for which those parties have settled their liability."), for which no potentially responsible party could be identified. Ten percent was attributed to two recalcitrant (nonparticipating) potentially responsible parties, and there was insufficient information to overcome the presumption that costs will be allocated only among the participating potentially responsible parties. ##### [410-30-55-37](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:d9ac9db6c11f1b79cba868afd1e5e0cb53ce639995937b03578a611682b510dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. XYZ gained some understanding of the other participating potentially responsible parties' financial condition and believed each of them was able and likely to pay its full share of the costs of the remedial investigation-feasibility study. XYZ was concerned, however, about the ability of potentially responsible party No. 3 to pay its full share of the cost of the overall remediation effort. ##### [410-30-55-38](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:34de6882ab39773ef6e252deeadb712fbd058845e1d05fbd8ca7e0fb8a59a295 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the amount already spent on legal costs and the results of potentially responsible party organization efforts, XYZ determined that $350,000 was the best estimate of its separate legal costs. The estimate of the costs that will be incurred to perform the remedial investigation-feasibility study, which now included group administration costs, now stood at $1.2 million to $2.2 million. ##### [410-30-55-39](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:c607ab8a70d884f6aaf057b916b7b9f771a1dc9e08022bf7800879f81c95ec44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remedial investigation-feasibility study was substantially completed in 1991. No changes were made to the potentially responsible parties allocation percentages as a result of the remedial investigation-feasibility study completion. The potentially responsible party group's initial estimate of the cost of implementing the remedy expected to be required by the Environmental Protection Agency was $25 million to $30 million. No amount within this range was considered to be a better estimate than any other amount within the range. This estimate included estimates of the cost of all elements of the remediation effort, including common legal, engineering, construction, monitoring, operation and maintenance costs (including postremediation monitoring for a period of 30 years), and so forth. ##### [410-30-55-40](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:a0544a4b5f794a357910bc5f332ee978fc856d3997f30a4c0375235972d06014 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. XYZ believed that potentially responsible party No. 2 and potentially responsible party No. 4 could and would pay their full shares of the cost of the remediation effort. Potentially responsible party No. 3, however, indicated that, because of its deteriorating financial position, it would likely be unable to pay more than two-thirds of its 15 percent share and none of its allocated amount attributed to the orphan and recalcitrant shares, or 10 percent of those costs. XYZ shared potentially responsible party No. 3's views about potentially responsible party No. 3's ability to pay. ##### [410-30-55-41](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:bfeaac056a66308019b43772b377c9d14854904c2fb5efd13d0d01d6038ca2eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Three years after site studies began, the Environmental Protection Agency and its outside contractors evaluated the reports submitted under the terms of the unilateral administrative order. A record of decision was issued by the Environmental Protection Agency on September 30, 1992, in which remedial actions based on the remedial investigation-feasibility study were selected and cost estimates were presented. The potentially responsible parties were requested to voluntarily implement the record of decision and again sign up to the terms demanded by the government. No preenforcement federal court review is permitted, even if the remedy specified in the record of decision is scientifically flawed, unattainable by available, proven technology, non-cost-effective, or open-ended. The potentially responsible parties had the following choices: perform the remedy specified in the record of decision voluntarily, or refuse to do work, in which case the Environmental Protection Agency would either issue another unilateral administrative order or perform the work using its contractor procurement systems and sue the potentially responsible parties for cost recovery. The potentially responsible parties agreed to perform the remedy specified in the record of decision and entered into a consent judgment. ##### [410-30-55-42](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:08d845e53b904fd5a4be206ba489374c9bebe2d5254d44ab44f25f8dd01dd581 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Note that the law requires the Environmental Protection Agency to review the record of decision and remedy within five years of its implementation by the potentially responsible parties. If the objectives of the record of decision have not been attained, the Environmental Protection Agency may make additional demands on the potentially responsible parties. If one or more potentially responsible parties believe they have paid a disproportionate share of the costs, they may track down other potentially responsible parties and sue them in a contribution action. Although requests for reimbursement from Superfund can also be made for allocations attributed to unidentified or unknown parties (the orphan share) under certain conditions, this is not usually allowed by terms and conditions of consent order settlements withthe Environmental Protection Agency. ##### [410-30-55-43](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:704ae782ac2dfd896fd6b26639e40bffede0b1443907afee0ca0cc2d414591a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 450-20 requires accrual of a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Receipt in 1986 of an information request did not establish that a liability was probable because, notwithstanding the Environmental Protection Agency's interest in XYZ's connection, if any, to the site, it had not been established that XYZ was in fact associated with the site. As noted in paragraph [410-30-25-4](https://asc.understandingaccounting.org/asc/410/30/#410-30-25-4), however, receipt of notification that an entity may be a potentially responsible party compels the entity to action. ##### [410-30-55-44](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:e149fdd1f990628df2579b40a9b6c6fd2ad6e5c81872c7c867ba32b9ad38e71e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When XYZ determined late in 1986 that it had, in fact, contributed hazardous substances to the site, the liability became probable. The criteria for recognition had not yet been met, however, because XYZ did not have sufficient information to reasonably estimate a minimum amount in the range of its liability that would be material to its financial statements. Disclosure of the nature of the contingency and a statement that an estimate of the loss or range of loss cannot be made was required under Subtopic 450-20. ##### [410-30-55-45](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:8d5f15b5991fa2cb923d72b312d97f41539a73a43d4661417b65c16c6cede199 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During 1987, little additional information that would aid XYZ in making an estimate of the loss or range of loss became available. Therefore, the accounting and disclosure for the contingent loss related to the remediation liability remained the same. ##### [410-30-55-46](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:8d298d1a6b5abf70c6439123dee1ef373de57aff7783b4ad72ccb01d3c0cc3bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 1988, when XYZ agreed to perform a remedial investigation-feasibility study in accordance with the Environmental Protection Agency's unilateral administrative order and the potentially responsible party group was formed, XYZ should have recorded a liability of $400,000, computed as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-4E92250A-9415-4F43-B6FC-441714D52508-low.gif) "XYZ's estimated share of the minimum amount in the range of the estimated cost of the remedial investigation-feasibility study \[20 percent of $1,000,000\]" " $200,000 " XYZ's minimum estimate of its legal costs " 200,000 " " $400,000 " ##### [410-30-55-47](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:7613bb8f92b2d0712ac62e6236a78b715378ea15af924d86fac1706b3131ac8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because other potentially responsible parties had agreed during 1988 to participate in the remedial investigation-feasibility study effort, they are considered to be participating potentially responsible parties. Neither the fact that the unilateral administrative order named only XYZ nor the fact that a preliminary cost-sharing formula had not yet been determined by the arbitrator should have required XYZ to accrue more than its estimated allocable share of the minimum estimated liability. ##### [410-30-55-48](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:b71e5a90300e6751094be72b5ad94d4ffde3301a31ecfe043b0575330c35e970 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although no recognition benchmarks were achieved in 1989 or 1990, XYZ should have refined its estimate of its liability as additional significant information became available. For example, in 1989, when the preliminary cost-sharing formula was developed by the arbitrator and the estimate of the cost of the remedial investigation-feasibility study was revised, XYZ should have refined its estimate of its share of the cost of the remedial investigation-feasibility study and adjusted its liability to $719,231, less any amounts already expended. $719,231 is computed as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-7EB32C51-28E2-43BD-B921-C89A1B05BABE-low.gif) XYZ's allocable share of the minimum amount in the range of the estimated cost of the remedial investigation-feasibility study \[20 percent of $1.2 million\] " $240,000 " XYZ's pro rata share of amounts allocable to other parties but that are not expected to be paid by those other parties \[20/65 of 35 percent of $1.2 million\] " 129,231 " XYZ's estimated legal costs " 350,000 " " $719,231 " ##### [410-30-55-49](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:643b75c619bfeefeb11938e3e7391032bcb87f45df293e5851222313b8923985 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. By the time the feasibility study was substantially completed in 1991, XYZ should have adjusted its liability to reflect its estimated share of the minimum amount of the overall remediation liability. Based on the facts presented, this amount should be $9,350,000, less any amounts already expended. $9,350,000 is computed as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C06E5952-9D5E-495C-B1AA-CA2E6780E5A8-low.gif) 20% of $25 million " $5,000,000 " 20/65 of 35 percent of $25 million " 2,692,308 " 20/50 of amount allocable to potentially responsible party No. 3 that is not expected to be paid by potentially responsible party No. 3 \[20/50 of 5 percent of $25 million plus 20/50 of 15/65 of 35 percent of $25 million\] " 1,307,692 " Estimated legal costs " 350,000 " " $9,350,000 " ##### [410-30-55-50](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:f98d6f3abe164def6a6b909117eb49aa8c005c508d1a26a745d80adb98b36026 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimate of the environmental remediation liability should be further refined when the record of decision is issued in 1992 and at various other points when additional information becomes available. ##### [410-30-55-51](https://asc.understandingaccounting.org/asc/410/30/#410-30-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T00:21:44.319Z to 2026-09-10T00:21:44.319Z Record version: sha256:330e2caa89016f4b8fcc400967c5fa163968548cd377de4cd3c88fdc1a23be80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The measurement of the remediation liability should not have been discounted at any point during the period under discussion because the amount of the obligation and the amount and timing of cash payments were not fixed or reliably determinable.