# ASC 720-40: Other Expenses — Electronic Equipment Waste Obligations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/40/)

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.

Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure.

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:46.648Z

Record version: sha256:83106e45c59a9c293753f31eadb34b712e4255b6388e29675684ffe74df2abe8

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40: Other Expenses — Electronic Equipment Waste Obligations

### Machine-generated study aids

```json
{
  "summary": "ASC 720-40 addresses when a producer must recognize a liability and expense for the cost of disposing of \"historical waste\" electrical and electronic equipment held by private households under EU Directive 2002/96/EC (WEEE). Because the Directive funds historical household waste collectively by producers selling in the market during a country-defined measurement period, the obligating event is participation in that market — so no liability may be recognized before the measurement period begins, regardless of how much qualifying equipment the producer previously sold (720-40-25-1). The liability is accrued over the measurement period based on estimated total program costs and the producer's estimated market share, and is adjusted as actual data arrives (720-40-25-3; 720-40-35-1).",
  "key_points": [
    "The Subtopic applies only to historical waste (products put on the EU market on or before August 13, 2005) held by private households; commercial-user historical waste and new waste are scoped out and addressed elsewhere (720-40-05-3; 720-40-05-4; 720-40-15-2).",
    "The obligation for financing household historical waste is triggered by participation in the market during the measurement period defined by each EU-member country and shall not be recognized before that period begins (720-40-25-1).",
    "Equipment qualifying as historical waste that the producer sold before the measurement period is disregarded in determining the obligation (720-40-25-1).",
    "Each producer contributes proportionately based on market participation (for example, share of market by type of equipment), with the exact allocation method set by each EU-member country (720-40-25-2).",
    "Where allocation is by market share during the period, a liability and offsetting expense are recognized over the measurement period based on estimated total allocable program costs multiplied by estimated market share (720-40-25-3).",
    "The liability shall be adjusted as actual market share and program cost information is received (720-40-35-1).",
    "Costs of new-equipment waste (products marketed after August 13, 2005) are borne solely by the producers of that new equipment and are accounted for under Subtopic 410-20 (720-40-05-3, referencing 410-20-55-23)."
  ],
  "categories": [
    "Recognition",
    "Subsequent measurement",
    "Contingencies and guarantees",
    "Industry-specific"
  ],
  "audience_level": "intermediate",
  "student_note": "This is a classic \"what is the obligating event?\" question: students often assume the liability arises when the equipment was originally sold, but under the WEEE scheme for household historical waste it arises only from selling in the market during the measurement period, so a producer that exits the market recognizes nothing. Note the split in guidance — household historical waste here in 720-40, commercial-user historical waste and new waste under 410-20.",
  "related_topics": [
    "410-20",
    "410-30",
    "450-20",
    "720-10"
  ],
  "key_concepts": [
    "historical waste",
    "new waste",
    "weee directive 2002/96/ec",
    "measurement period",
    "market share allocation",
    "obligating event",
    "liability recognition and adjustment",
    "private households vs. commercial users"
  ]
}
```

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:32.175Z

Record version: sha256:0355a9c9f9f024e4fee41d1aeb0142f7db1f254a489b5463ed06bf48d08fc437

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/720/40/#05-overview-and-background)

SEC content: no

##### [720-40-05-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-05-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:32.175Z

Record version: sha256:d5b792cb127387da6d784f435bfc909fd6116fdff7f37a9f75fed5d1e440fb41

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

##### [720-40-05-2](https://asc.understandingaccounting.org/asc/720/40/#720-40-05-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:32.175Z

Record version: sha256:00e7d6113f7cc27fc4d65f63ac1d479bc0e8cd6541cc72c3991899d571b8ab5b

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

##### [720-40-05-3](https://asc.understandingaccounting.org/asc/720/40/#720-40-05-3)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:32.175Z

Record version: sha256:5874b827ce974b07b1035579216ffcedf8b53f8cdb7153f71d656f17794111d6

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The Directive distinguishes between new and historical waste. New waste relates to products put on the market after August 13, 2005. All products put on the market on or before August 13, 2005, are deemed to be historical waste equipment for the purposes of the Directive. This Subtopic does not address the accounting for new waste. As explained in paragraph [410-20-55-23](https://asc.understandingaccounting.org/asc/410/20/#410-20-55-23), costs relating to waste of new equipment are to be borne solely by the producers of the new equipment.

##### [720-40-05-4](https://asc.understandingaccounting.org/asc/720/40/#720-40-05-4)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:32.175Z to 2026-09-10T01:08:32.175Z

Record version: sha256:94b144a629f014f1703dd58378d790280c2aa3ecfa439225ccc5ec94cdd6aa8f

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

Source downloaded (UTC): 2026-09-10T01:08:35.048Z to 2026-09-10T01:08:35.048Z

Record version: sha256:168ac3956a57e6c7cb256ef098d529d039a57b4886af6cab0ff56f5d56721107

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/720/40/#15-scope-and-scope-exceptions)

SEC content: no

#### Entities

##### [720-40-15-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-15-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:35.048Z to 2026-09-10T01:08:35.048Z

Record version: sha256:7031cc2bf922cd18f573bfc9fd6ea240c942ab82334f3115af943775c73872a9

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

#### Transactions

##### [720-40-15-2](https://asc.understandingaccounting.org/asc/720/40/#720-40-15-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:35.048Z to 2026-09-10T01:08:35.048Z

Record version: sha256:7a54052277b485142fd218e9ced7df20795cdad39ce2be37c666013fbaf232ea

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The guidance in this Subtopic does not apply to the following transactions and activities:

1.  a
    
    Historical waste from commercial users as addressed in Subtopic 410-20
    
2.  b
    
    New waste as defined in the Directive.

Source downloaded (UTC): 2026-09-10T01:08:37.268Z to 2026-09-10T01:08:37.268Z

Record version: sha256:78da880e875617390a15229e7da4da26ac9803ac5c6874e676d53f0843ff133d

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/720/40/#25-recognition)

SEC content: no

##### [720-40-25-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-25-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:37.268Z to 2026-09-10T01:08:37.268Z

Record version: sha256:cf04ca77990737a1d89813ec00e65140cf540a0815317062a1d09e7e26234dd9

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

##### [720-40-25-2](https://asc.understandingaccounting.org/asc/720/40/#720-40-25-2)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:37.268Z to 2026-09-10T01:08:37.268Z

Record version: sha256:07224d7e3cc376a819c6913776a725f8fc846e9212b02d9172693fcde5e75209

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

##### [720-40-25-3](https://asc.understandingaccounting.org/asc/720/40/#720-40-25-3)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:37.268Z to 2026-09-10T01:08:37.268Z

Record version: sha256:2370a92c4c706636e706382ca26122cc8d22c38b233d639c8e75d208aa892ab4

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.

Source downloaded (UTC): 2026-09-10T01:08:40.371Z to 2026-09-10T01:08:40.371Z

Record version: sha256:555396789e09ce3a5a8208484e749ca89b315e274e7242e92386e79a86e251fa

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40-30: 30 Initial Measurement

[Read section](https://asc.understandingaccounting.org/asc/720/40/#30-initial-measurement)

SEC content: no

##### [720-40-30-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-30-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:40.371Z to 2026-09-10T01:08:40.371Z

Record version: sha256:75d4222606028925abdc03d9b2b931257bb873236583e6e055fd4c9540256478

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


See Section 720-40-25 for a discussion of measurement issues.

Source downloaded (UTC): 2026-09-10T01:08:43.758Z to 2026-09-10T01:08:43.758Z

Record version: sha256:9b0122df4f5fcc36326d4f2ff4d9c37f76037caee772a8add6f7688e2e630076

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


## ASC 720-40-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/720/40/#35-subsequent-measurement)

SEC content: no

##### [720-40-35-1](https://asc.understandingaccounting.org/asc/720/40/#720-40-35-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:43.758Z to 2026-09-10T01:08:43.758Z

Record version: sha256:a2e285ba7538ca0788b0bc4c5ba016c6541dcac27328f1aae625b03dc2024efe

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


The liability shall be adjusted as actual market share and program cost information is received.

Source downloaded (UTC): 2026-09-10T01:08:46.648Z to 2026-09-10T01:08:46.648Z

Record version: sha256:db124a8db53fe6862be630f9ca93018566e8fe2af357b685a363e2b8d6969bd6

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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

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

SEC content: no

#### Illustrations

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

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:46.648Z to 2026-09-10T01:08:46.648Z

Record version: sha256:f60393c027984651995fc43a770c9b11e85a5420a4f8a32c757884cc225b3afe

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:46.648Z to 2026-09-10T01:08:46.648Z

Record version: sha256:520d2461bd1cb8ca7bf512ef2cbd34b0fa88af55360c23636c82fb7016df54a7

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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)

Pending content: no

Source downloaded (UTC): 2026-09-10T01:08:46.648Z to 2026-09-10T01:08:46.648Z

Record version: sha256:c6355dab6cf323b85fbca99bf1f9031ecfcfcc05f295e3a4ab43a159851d22e7

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

Effective as of: not established by retrieval timestamps.


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.