# ASC 720-40-55: Other Expenses — Electronic Equipment Waste Obligations — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/40/#55-implementation-guidance-and-illustrations)

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## ASC 720-40-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/720/40/#55-implementation-guidance-and-illustrations)

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#### Illustrations

##### [720-40-55-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-55-1)

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This Example illustrates the guidance in Sections 720-40-25 and 720-40-35.

##### [720-40-55-2](https://asc.understandingaccounting.org/asc/720/40/#720-40-55-2)

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An entity is a producer of electronic equipment that is covered by the Directive. The entity has produced and sold this type of electronic equipment for several years. In the EU-member country in which the entity operates, legislation requires producers to be responsible for costs associated with the disposal of electronic equipment from private households based on each producer's participation in the market, measured by market share, during the measurement period. The EU-member country has defined the measurement period as calendar-year 2005. The entity achieves a 4 percent market share in 2004 and expects to achieve a 5 percent market share in 2005.

##### [720-40-55-3](https://asc.understandingaccounting.org/asc/720/40/#720-40-55-3)

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The entity should not recognize a liability in 2004 for the costs associated with the disposal of historical waste held by private households. The obligation is triggered by participation in the market during 2005 (the measurement period). A liability for the obligation, with an offsetting amount to expense, should be recognized over the year for the appropriate portion of the annual cost based on its estimated percent market share. The liability should be adjusted as actual market share information is received. The entity should recognize a liability relating to historical waste costs incurred during 2006 as the entity participates in the market in 2006.