# ASC 710-980-25: Compensation—General — Regulated Operations — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/710/980/#25-recognition)

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## ASC 710-980-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/710/980/#25-recognition)

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#### Compensated Absences

##### [710-980-25-1](https://asc.understandingaccounting.org/asc/710/980/#710-980-25-1)

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Topic 710 specifies criteria for accrual of a liability for employees' compensation for future absences. For rate-making purposes, compensation for employees' absences may be included in [allowable costs](https://asc.understandingaccounting.org/glossary/a/#allowable-costs "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.") when the compensation is paid.

##### [710-980-25-2](https://asc.understandingaccounting.org/asc/710/980/#710-980-25-2)

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The liability, if any, shall be accrued in accordance with Topic 710 because rate actions of the regulator cannot eliminate obligations that were not imposed by the regulator (see paragraph [980-405-40-1](https://asc.understandingaccounting.org/asc/405/980/#405-980-40-1)). By including the accrued compensation in future allowable costs on an as-paid basis, the regulator provides reasonable assurance of the existence of an asset. The asset is the probable future benefit (increased revenue) that will result from the regulatory treatment of the subsequent payment of the liability (see paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1)). Accordingly, the entity also shall record the asset that results from the regulator's actions.