{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/470/980/","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":"470-980","topic":"470","title":"Regulated Operations","area":"Liabilities","paragraphs":5,"summary":"This Subtopic modifies the general rule that gains and losses on early extinguishment of debt hit income immediately (Subtopic 470-50) for entities whose rates are set by a regulator. If the regulator will recover a reacquisition loss through future rates, the regulated entity capitalizes the excess of reacquisition price over net carrying amount as a regulatory asset; if the regulator will reduce future rates for a gain, the entity records a regulatory liability. Either amount is amortized as an adjustment of interest expense over the period reflected in rate-making.","concepts":["early extinguishment of debt","regulated operations","regulatory asset","regulatory liability","reacquisition price","net carrying amount","rate-making","amortization of interest expense"],"categories":["Derecognition","Industry-specific","Subsequent measurement","Debt and equity"],"level":"intermediate","topic_title":"Debt","sections":[{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"470-980-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides guidance for debt for entities with regulated operations.</div></div>","snippet":"This Subtopic provides guidance for debt for entities with regulated operations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:476a183229c78ea458d4f16f700024bf956323894a2b5235217d5eb969bc007b","downloaded_from":"2026-09-10T00:35:14.586Z","last_downloaded_at":"2026-09-10T00:35:14.586Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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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":"sha256:58025bd41b5982401a27ea7b8f7f4e1ff989df0c1e0aa4f1bb0c34ad4c6461d3","downloaded_from":"2026-09-10T00:35:17.809Z","last_downloaded_at":"2026-09-10T00:35:17.809Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval 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id=\"sfr_46B6FDA5-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Subtopic <a altsource=\"GUID-4274AB72-C9DB-4AC7-8F26-A725C2B7B60F.ditamap\" class=\"ditamap\">470-50</a> requires recognition in income of a gain or loss on an early extinguishment of debt in the period in which the debt is extinguished. For rate-making purposes, the difference between the entity's net carrying amount of the extinguished debt and the reacquisition price may be amortized as an adjustment of interest expense over some future period. </span></span></div></div>","snippet":"Subtopic 470-50 requires recognition in income of a gain or loss on an early extinguishment of debt in the period in which the debt is extinguished. For rate-making purposes, the difference between the entity's net carry…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51b87beeed7830e01a2a22dcb167f065fffc39a4188e49cdea99fadda3159082","downloaded_from":"2026-09-10T00:35:22.975Z","last_downloaded_at":"2026-09-10T00:35:22.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478626","source_sha256":"8a9c52928caf80d3fa82bc083428022690a55389590fe2c5560e8288c52a9d35"}},{"citation":"470-980-40-2","para":"40-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_46B6FF42-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the debt is reacquired for an amount in excess of the entity's net carrying amount, the regulator's decision to increase future rates by amortizing the difference for rate-making purposes provides reasonable assurance of the existence of an asset (see paragraph <a href=\"/asc/340/980/#340-980-25-1\" class=\"xref\">980-340-25-1</a>). Accordingly, the regulated entity shall <a href=\"/glossary/c/#capitalize\" class=\"term\" title=\"Capitalize is used to indicate that the cost would be recorded as the cost of an asset. That procedure is often referred to as deferring a cost, and the resulting asset is sometimes described as a deferred cost.\"><span>capitalize</span></a> the excess cost and amortize it over the period during which it will be allowed for rate-making purposes. </span></span></div></div>","snippet":"If the debt is reacquired for an amount in excess of the entity's net carrying amount, the regulator's decision to increase future rates by amortizing the difference for rate-making purposes provides reasonable assurance…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db2434e2e0aa5d25f8b8fb56796b587bd41b95102a117275f039a4508f90b9c2","downloaded_from":"2026-09-10T00:35:22.975Z","last_downloaded_at":"2026-09-10T00:35:22.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478626","source_sha256":"8a9c52928caf80d3fa82bc083428022690a55389590fe2c5560e8288c52a9d35"}},{"citation":"470-980-40-3","para":"40-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_46B7009A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the debt is reacquired for an amount that is less than the entity's net carrying amount, the regulator's decision to reduce future rates by amortizing the difference for rate-making purposes imposes a liability on the regulated entity (see paragraph <a href=\"/asc/405/980/#405-980-25-1\" class=\"xref\">980-405-25-1(c)</a>). Accordingly, the entity would record the difference as a liability and amortize it over the period during which permitted rates will be reduced. </span></span></div></div>","snippet":"If the debt is reacquired for an amount that is less than the entity's net carrying amount, the regulator's decision to reduce future rates by amortizing the difference for rate-making purposes imposes a liability on the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9de0af0f98b19e582fc420c451956213c3a982bed8cee17e694036f724b8cd39","downloaded_from":"2026-09-10T00:35:22.975Z","last_downloaded_at":"2026-09-10T00:35:22.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478626","source_sha256":"8a9c52928caf80d3fa82bc083428022690a55389590fe2c5560e8288c52a9d35"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1884951025f18d84e527201d5325902812e783c68c3dc807d1749ccf0f32aef","downloaded_from":"2026-09-10T00:35:22.975Z","last_downloaded_at":"2026-09-10T00:35:22.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478626","source_sha256":"8a9c52928caf80d3fa82bc083428022690a55389590fe2c5560e8288c52a9d35"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24001608b59cdbdb332d00971eac4cf3ec2c4e783ac3b2d81f1a5a8292bc09fe","downloaded_from":"2026-09-10T00:35:22.975Z","last_downloaded_at":"2026-09-10T00:35:22.975Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478626","source_sha256":"8a9c52928caf80d3fa82bc083428022690a55389590fe2c5560e8288c52a9d35"}}],"enrichment":{"summary":"This Subtopic modifies the general rule that gains and losses on early extinguishment of debt hit income immediately (Subtopic 470-50) for entities whose rates are set by a regulator. If the regulator will recover a reacquisition loss through future rates, the regulated entity capitalizes the excess of reacquisition price over net carrying amount as a regulatory asset; if the regulator will reduce future rates for a gain, the entity records a regulatory liability. Either amount is amortized as an adjustment of interest expense over the period reflected in rate-making.","key_points":["Subtopic 470-50 normally requires a gain or loss on early extinguishment of debt to be recognized in income in the period of extinguishment, but for rate-making the difference between net carrying amount and reacquisition price may be amortized as an adjustment of interest expense over a future period (470-980-40-1).","When debt is reacquired for more than its net carrying amount and the regulator increases future rates to amortize the difference, that decision gives reasonable assurance of an asset, so the entity capitalizes the excess cost (470-980-40-2; see 980-340-25-1).","The capitalized excess is amortized over the period during which it will be allowed for rate-making purposes (470-980-40-2).","When debt is reacquired for less than its net carrying amount and the regulator reduces future rates, a liability is imposed on the entity, which records the difference as a liability (470-980-40-3; see 980-405-25-1(c)).","That liability is amortized over the period during which permitted rates will be reduced (470-980-40-3).","The scope of this Subtopic is the same as the Regulated Operations Overall Subtopic scope in Section 980-10-15 (470-980-15-1)."],"categories":["Derecognition","Industry-specific","Subsequent measurement","Debt and equity"],"audience_level":"intermediate","student_note":"This is the classic example of rate regulation overriding normal income-statement timing: the gain or loss is deferred on the balance sheet as a regulatory asset or liability rather than recognized immediately. The common mistake is assuming deferral is automatic for any utility — it depends on the regulator actually reflecting the amount in future rates.","related_topics":["470-50","980-10","980-340","980-405","980-360"],"key_concepts":["early extinguishment of debt","regulated operations","regulatory asset","regulatory liability","reacquisition price","net carrying amount","rate-making","amortization of interest expense"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e85ea10c0c5e15a33a32df6bd684bc284a9aec10b55e1c2f16671fc26a61604","downloaded_from":"2026-09-10T00:35:14.586Z","last_downloaded_at":"2026-09-10T00:35:24.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"405-980","title":"Regulated 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Liabilities","topic_title":"Liabilities","score":0.7457,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62d724a2ffbc58c3785080c1a498b05a66aa29b803d4f75fceb504620d40faf3","downloaded_from":"2026-09-10T00:13:46.142Z","last_downloaded_at":"2026-09-10T00:14:11.157Z","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 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