This Subtopic provides guidance on accounting for historical electronic equipment waste held by private households for obligations associated with Directive 2002/96/EC on Waste Electrical and Electronic Equipment adopted by the European Union.
This Subtopic refers to and paraphrases various provisions of the Directive. Nothing in this Subtopic shall be considered a definitive interpretation of any provision of the Directive for any purpose.
For the financing of historical waste, the Directive also distinguishes between historical waste from private households and historical waste from users other than private households (commercial users).
This Subtopic provides guidance for historical waste from private households, while Subtopic
410-20 provides guidance for historical waste from commercial users.
The guidance in this Subtopic applies to all entities affected by Directive 2002/96 on Waste Electrical and Electronic Equipment adopted by the European Union.
The guidance in this Subtopic does not apply to the following transactions and activities:
- a
Historical waste from commercial users as addressed in Subtopic
410-20 - b
New waste as defined in the Directive.
The financing of historical waste held by private households is to be borne collectively by producers that are selling in the market during each measurement period (to be defined by each EU-member country). The obligation is triggered by participation in the market during the measurement period and, therefore, shall not be recognized before the beginning of that period. The volume of equipment that qualifies as historical waste that those producers have sold in the market before the measurement period is not considered.
Producers will be required to contribute proportionately based on their participation in the market (for example, in proportion to their respective share of the market by type of equipment). However, the exact method to be used to compute the respective proportions to be contributed by producers will be determined by each EU-member country.
If, for example, the method is based on each producer's respective share of the market by type of equipment during the measurement period, a liability for the obligation, with an offsetting amount to expense, shall be recognized over the measurement period for the appropriate portion of the cost based on the estimated total allocable costs of the waste management program and that producer's estimated market share.
See Section
720-40-25 for a discussion of measurement issues.
The liability shall be adjusted as actual market share and program cost information is received.
This Example illustrates the guidance in Sections
720-40-25 and
720-40-35.
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.
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.