{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/450/980/","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.","number":"450-980","topic":"450","title":"Regulated Operations","area":"Liabilities","paragraphs":3,"summary":"This subtopic addresses loss contingencies for entities with regulated operations (rate-regulated utilities). Its core rule: when a regulator allows an entity to recover an amount for a contingency in rates even though the amount does not meet the accrual criteria of 450-20-25-2, and the regulator requires the entity to remain accountable for amounts collected but not yet spent for the intended purpose, the increased charges to customers give rise to a liability rather than income.","concepts":["loss contingency","rate-regulated operations","allowable costs","regulatory liability","rate-making","accountability to customers","accrual criteria"],"categories":["Contingencies and guarantees","Recognition","Industry-specific"],"level":"intermediate","topic_title":"Contingencies","sections":[{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"450-980-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides guidance for contingencies for entities with regulated operations.</div></div>","snippet":"This Subtopic provides guidance for contingencies for entities with regulated operations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:00ce5d32cf7661436525fb4b91ab64e55b382d04c49a8a6a978be8f990d465c1","downloaded_from":"2026-09-10T00:29:15.540Z","last_downloaded_at":"2026-09-10T00:29:15.540Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478336","source_sha256":"3453a82d41d9444df3204b154e2a7fcfbadb95d10a5ee18ffb9b8922b2a4b4a3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fc7e3fc5ac51effaffcd6a7823e4be3d41b42d9703499796b38946e0bdca49a9","downloaded_from":"2026-09-10T00:29:15.540Z","last_downloaded_at":"2026-09-10T00:29:15.540Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478336","source_sha256":"3453a82d41d9444df3204b154e2a7fcfbadb95d10a5ee18ffb9b8922b2a4b4a3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47c86ca5bc3bca90069fac7c9a714a7fce0f0a514b7b0a1cdd75f3aded0dd4d1","downloaded_from":"2026-09-10T00:29:15.540Z","last_downloaded_at":"2026-09-10T00:29:15.540Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478336","source_sha256":"3453a82d41d9444df3204b154e2a7fcfbadb95d10a5ee18ffb9b8922b2a4b4a3"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"450-980-15-1","para":"15-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-DFCF42C6-CE0D-45BC-9846-5A2EFDE587F3.ditamap\" class=\"ditamap\">980-10-15</a>.</div></div>","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:74bd8f5e9469b298c846dab30a3055361b7582f5e76dcdd8dedaab7d92e661e8","downloaded_from":"2026-09-10T00:29:17.238Z","last_downloaded_at":"2026-09-10T00:29:17.238Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479014","source_sha256":"31e69a6ff38fc5a4b382cdbcaf7a0bd720fcabbda2ac888946ddb68ac8e35eb3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a571f87e97ad350214e7d9aa77b93a07bd4fb62ff69016521672ab3d4946cdfc","downloaded_from":"2026-09-10T00:29:17.238Z","last_downloaded_at":"2026-09-10T00:29:17.238Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479014","source_sha256":"31e69a6ff38fc5a4b382cdbcaf7a0bd720fcabbda2ac888946ddb68ac8e35eb3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fb484d45be9367751bbc4f0206fb29e9c618c13a6cd08eaf1b154aa49ac9f207","downloaded_from":"2026-09-10T00:29:17.238Z","last_downloaded_at":"2026-09-10T00:29:17.238Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479014","source_sha256":"31e69a6ff38fc5a4b382cdbcaf7a0bd720fcabbda2ac888946ddb68ac8e35eb3"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"450-980-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_4692860C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraph <a href=\"/asc/450/20/#450-20-25-2\" class=\"xref\">450-20-25-2</a> specifies criteria for recording estimated losses from loss contingencies. A regulator may direct a regulated entity to include an amount for a contingency in <a href=\"/glossary/a/#allowable-costs\" class=\"term\" title=\"All costs for which revenue is intended to provide recovery. Those costs can be actual or estimated. In that context, allowable costs include interest cost and amounts provided for earnings on shareholders' investments.\"><span>allowable costs</span></a> for rate-making purposes even though the amount does not meet those criteria for recording. </span></span><span class=\"sfragment\" id=\"sfr_4692876B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the regulator requires the entity to remain accountable for any amounts charged pursuant to such rates and not yet expended for the intended purpose, the resulting increased charges to customers create a liability (see paragraph <a href=\"/asc/405/980/#405-980-25-1\" class=\"xref\">980-405-25-1(b)</a>). </span></span></div></div>","snippet":"Paragraph 450-20-25-2 specifies criteria for recording estimated losses from loss contingencies. A regulator may direct a regulated entity to include an amount for a contingency in allowable costs for rate-making purpose…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f12000a03a42b1759ca9d0f95026570d53fa06dbf993be3cf62db42c146dd6c1","downloaded_from":"2026-09-10T00:29:23.763Z","last_downloaded_at":"2026-09-10T00:29:23.763Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478044","source_sha256":"7fbb3d97fcff65b0f338435b71069166c4dd349818b91ce88517b55a1caa8e27"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ea422fc4ceeb8bc68b798d7901a9c590fab8696f65db49b97236a58593506ae","downloaded_from":"2026-09-10T00:29:23.763Z","last_downloaded_at":"2026-09-10T00:29:23.763Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478044","source_sha256":"7fbb3d97fcff65b0f338435b71069166c4dd349818b91ce88517b55a1caa8e27"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c7842b423f8ae931038f0207101ec7c25fef201827208bfab6727f4e8543b59b","downloaded_from":"2026-09-10T00:29:23.763Z","last_downloaded_at":"2026-09-10T00:29:23.763Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478044","source_sha256":"7fbb3d97fcff65b0f338435b71069166c4dd349818b91ce88517b55a1caa8e27"}}],"enrichment":{"summary":"This subtopic addresses loss contingencies for entities with regulated operations (rate-regulated utilities). Its core rule: when a regulator allows an entity to recover an amount for a contingency in rates even though the amount does not meet the accrual criteria of 450-20-25-2, and the regulator requires the entity to remain accountable for amounts collected but not yet spent for the intended purpose, the increased charges to customers give rise to a liability rather than income.","key_points":["Scope follows the general regulated-operations scope in Section 980-10-15 (450-980-15-1), i.e., entities whose rates are set by a regulator and are designed to recover specific costs.","A regulator may direct inclusion of a contingency amount in allowable costs for rate-making purposes even when the probable-and-reasonably-estimable criteria of 450-20-25-2 are not met (450-980-25-1).","Regulatory approval of rate recovery does not itself justify accruing a loss contingency under Subtopic 450-20.","If the regulator requires the entity to remain accountable for amounts charged in rates and not yet expended for the intended purpose, the increased charges to customers create a liability (450-980-25-1).","That liability is recognized under the regulatory-liability guidance in paragraph 980-405-25-1(b)."],"categories":["Contingencies and guarantees","Recognition","Industry-specific"],"audience_level":"intermediate","student_note":"Tested point: rate recovery ordered by a regulator is not a substitute for the 450-20-25-2 accrual test — the amount collected is a regulatory liability, not a loss accrual or immediate revenue. Students often wrongly assume regulator-approved cost recovery automatically means the contingency is 'probable' and should be expensed.","related_topics":["450-20","980-10","980-405","980-340","410-20"],"key_concepts":["loss contingency","rate-regulated operations","allowable costs","regulatory liability","rate-making","accountability to customers","accrual criteria"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:49003389aa1b580f36f8d9c473e5bb0a7afb1e41389d98a6017047e6055af991","downloaded_from":"2026-09-10T00:29:15.540Z","last_downloaded_at":"2026-09-10T00:29:23.763Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"405-980","title":"Regulated Operations","topic_title":"Liabilities","score":0.8729,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3a4871b23ab64b8ce612d5f0cb41ed28dd0018afe9aae859051c05c4249710b","downloaded_from":"2026-09-10T00:20:12.403Z","last_downloaded_at":"2026-09-10T00:20:28.784Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"450-10","title":"Overall","topic_title":"Contingencies","score":0.7657,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:28d3c209918a16d23d079e19aa32fa0f2b5bddfc224dc11cf30a82e068e3ceba","downloaded_from":"2026-09-10T00:26:49.502Z","last_downloaded_at":"2026-09-10T00:26:58.831Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"450-20","title":"Loss Contingencies","topic_title":"Contingencies","score":0.7523,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fa246ab96e718d01a8e4e548dacde05e07ea218780f2ab4f9e4e0935f85a1589","downloaded_from":"2026-09-10T00:27:01.778Z","last_downloaded_at":"2026-09-10T00:27:44.704Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"250-980","title":"Regulated Operations","topic_title":"Accounting Changes and Error Corrections","score":0.7462,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a2fe1ec0850a14375cbb0e3a54a36b7ad42ef43a565d66651b46455af741f863","downloaded_from":"2026-09-09T23:17:47.227Z","last_downloaded_at":"2026-09-09T23:17:57.739Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"410-980","title":"Regulated Operations","topic_title":"Asset Retirement and Environmental Obligations","score":0.7425,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:38270468268448ccf34206734a27674bcadaa579fc07184499cb253c7a74bccd","downloaded_from":"2026-09-10T00:22:01.250Z","last_downloaded_at":"2026-09-10T00:22:29.648Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"710-980","title":"Regulated Operations","topic_title":"Compensation—General","score":0.7311,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:41d6d6a4a1d380aee3fa296f126b2be80a83ef3461a9a82b468d40191510dbbe","downloaded_from":"2026-09-10T00:58:07.626Z","last_downloaded_at":"2026-09-10T00:58:16.201Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"450-958","title":"Not-for-Profit Entities","topic_title":"Contingencies","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bd53ac8021a51fd4e33effcfaba3a8b857ef1900443f21b208718aa74ed2065f","downloaded_from":"2026-09-10T00:28:58.769Z","last_downloaded_at":"2026-09-10T00:29:12.159Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"460-10","title":"Overall","topic_title":"Guarantees","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de6090667bd131fe84830b90568b421e43aa5d497852c80dd8e4ef261c3a0ec0","downloaded_from":"2026-09-10T00:29:25.783Z","last_downloaded_at":"2026-09-10T00:30:02.138Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d771a6309e8695f1f8add3d0c47e5f898d923fb470cc65850a28cb13c02e0d9","downloaded_from":"2026-09-10T00:29:15.540Z","last_downloaded_at":"2026-09-10T00:29:23.763Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}