# ASC 810-980: Consolidation — Regulated Operations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/810/980/) 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): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:48.416Z Record version: sha256:ed4ec58af64e5994f6d017e1f3090c0993249fa01aef7fe6c74a7ee69d914e46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980: Consolidation — Regulated Operations ### Machine-generated study aids ```json { "summary": "This Subtopic provides the consolidation guidance unique to entities with regulated operations. Its core rule is an exception to the normal requirement that intra-entity profit be eliminated in consolidation: profit on sales to a regulated affiliate need not be eliminated if the sales price is reasonable and it is probable that the rate-making process will produce future revenue approximately equal to that sales price from the affiliate's use of the products. Reasonableness is normally presumed when the regulator accepts or does not challenge the price.", "key_points": [ "Scope follows the Overall Regulated Operations Subtopic, Section 980-10-15 (810-980-15-1).", "Profit on sales to regulated affiliates shall not be eliminated in general-purpose financial statements if both criteria in 810-980-45-1 are met: the sales price is reasonable, and it is probable that future revenue approximately equal to the sales price will result through the rate-making process from the affiliate's use of the products.", "Both criteria must be satisfied; failing either means the normal intra-entity profit elimination applies (810-980-45-1).", "A sales price is usually considered reasonable if it is accepted or not challenged by the regulator governing the regulated affiliate (810-980-45-2).", "If the price is challenged, reasonableness is judged in light of the circumstances, for example by the return on investment earned by the manufacturing or construction operations or by comparing transfer prices with prices available from other sources (810-980-45-2)." ], "categories": [ "Consolidation", "Industry-specific", "Presentation" ], "audience_level": "intermediate", "student_note": "This is a rare industry exception to the bedrock consolidation rule that all intra-entity profit must be eliminated — worth remembering because it is counterintuitive. The common misunderstanding is thinking regulator silence alone is enough; you still need the separate probability that rates will recover revenue approximately equal to the sales price.", "related_topics": [ "980-10", "810-10", "980-340", "980-605", "850-10" ], "key_concepts": [ "intra-entity profit elimination", "regulated affiliate", "rate-making process", "reasonable sales price", "transfer pricing", "regulator acceptance", "consolidated financial statements" ] } ``` Source downloaded (UTC): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:28.274Z Record version: sha256:4e6c02705964d6b8b38c4a6e0e16efcc6b0d25c24b55f833406e8e987b389429 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/810/980/#05-overview-and-background) SEC content: no ##### [810-980-05-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:28.274Z to 2026-09-10T01:34:28.274Z Record version: sha256:cc21a7d53db14a4b51265a620f8d3bd5d70a7a664ae86bae03aec02d540e05ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on consolidation for entities with regulated operations. Source downloaded (UTC): 2026-09-10T01:34:30.161Z to 2026-09-10T01:34:30.161Z Record version: sha256:02313b98de6b889ab061d62280a99e0bb0d008ff55ef6cf5a4a1859abe7700b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/810/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [810-980-15-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:30.161Z to 2026-09-10T01:34:30.161Z Record version: sha256:d60d838019b1eba45dccf7091d50219a623e4634acc7edd1defb8d51c7c887fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15. Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:d24cfb7f0052edbc681e611c9008f571c3d8b60b5d73134c49957cf0a5d7920b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/980/#45-other-presentation-matters) SEC content: no #### Affiliated Sales ##### [810-980-45-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:413bc1ec9fdaf11af92bd8c3050d59a7f68e728bc6514970bd9f3f6c291d41d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Profit on sales to regulated affiliates shall not be eliminated in general-purpose financial statements if both of the following criteria are met: 1. a The sales price is reasonable. 2. b It is probable that, through the rate-making process, future revenue approximately equal to the sales price will result from the regulated affiliate's use of the products. ##### [810-980-45-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:31.981Z to 2026-09-10T01:34:31.981Z Record version: sha256:2d75b11d4bdc68ef97616659e8fa93b4190b3527c1956d5f612bbc766bcb1cda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The sales price usually shall be considered reasonable if the price is accepted or not challenged by the regulator that governs the regulated affiliate. Otherwise, reasonableness shall be considered in light of the circumstances. For example, reasonableness might be judged by the return on investment earned by the manufacturing or construction operations or by a comparison of the transfer prices with prices available from other sources. Source downloaded (UTC): 2026-09-10T01:34:36.258Z to 2026-09-10T01:34:36.258Z Record version: sha256:c8bed30c67d13a3dba1194adfb01d51ccc83e7bc0e8e6cb256ee91aeca8450b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-00-status) SEC content: yes ##### [810-980-S00-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:36.258Z to 2026-09-10T01:34:36.258Z Record version: sha256:c617764a7cec614aa385e6bac25c6042f414cdcd29e02029bf80412d95ef4e17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
980-810-S45-1SupersededAccounting Standards Update No. 2018-0403/09/2018
980-810-S99-1SupersededAccounting Standards Update No. 2018-0403/09/2018
Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:c178bc9044f2e588534a58dd8d590a4ddab508a221792d4f4cdcc44d6afd18f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-45-other-presentation-matters) SEC content: yes ##### [810-980-S45-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:e335af023c875c5de43650f249e44312e05e10d0ec3fa741b66fdee748265c41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-04](https://asc.understandingaccounting.org/updates/asu-2018-04/). #### Financing Through Construction Intermediaries ##### [810-980-S45-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:40.079Z to 2026-09-10T01:34:40.079Z Record version: sha256:679f7194289b29eb227f381f0e5dce94fbad4210656108f3944fb2769a10232a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [980-810-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2), SAB Topic 10.A, for SEC Staff views on the presentation of construction work in progress and related liabilities and interest expense being financed through a construction intermediary. Source downloaded (UTC): 2026-09-10T01:34:42.579Z to 2026-09-10T01:34:42.579Z Record version: sha256:d60919436667d57bf18b41b97a41160846c5e57a4579db2107e6a1b9064ce9e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-50-disclosure) SEC content: yes #### Financing Through Construction Intermediaries ##### [810-980-S50-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:42.579Z to 2026-09-10T01:34:42.579Z Record version: sha256:438cae82ac36f0cb31ff8f35b27b565fadd7d06ca0ca42bc39e75a129e4821c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [980-810-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2), SAB Topic 10.A, for SEC Staff views on disclosures when construction is financed through an intermediary. Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:1e7462a8f5dba2b7272a76e29a93cefa096ba31a9c8ba7b1d86f30623094036a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 810-980-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/810/980/#sec-99-sec-materials) SEC content: yes ##### [810-980-S99-1](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:e65c367618c9014e6d9917e987cdac87381b33092da438dbdaf9d04328736e02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-04](https://asc.understandingaccounting.org/updates/asu-2018-04/). #### SEC Staff Guidance ##### [810-980-S99-2](https://asc.understandingaccounting.org/asc/810/980/#810-980-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:34:48.416Z to 2026-09-10T01:34:48.416Z Record version: sha256:4979600cece1b97304fbb36bacfc9464353de5aa9d60e6528a99d9350094969d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 10.A, Financing by Electric Utility Companies Through Use of Construction Intermediaries. - Facts: Some electric utility companies finance construction of a generating plant or their share of a jointly owned plant through the use of a "construction intermediary" which may be organized as a trust or a corporation. Typically the utility assigns its interest in property and other contract rights to the construction intermediary with the latter authorized to obtain funds to finance construction with term loans, bank loans, commercial paper and other sources of funds and that may be available. The intermediary's borrowings are guaranteed in part of the work in progress but more significantly, although indirectly, by the obligation of the utility to purchase the project upon completion and assume or otherwise settle the borrowings. The utility may be committed to provide any deficiency of funds which the intermediary cannot obtain and excess funds may be loaned to the utility by the intermediary. (In one case involving construction of an entire generating plant, the intermediary appointed the utility as its agent to complete construction.) On the occurrence of an event such as commencement of the testing period for the plant or placing the plant in commercial service (but not later than a specified date) the interest in the plant reverts to the utility and concurrently the utility must either assume the obligations issued by the intermediary or purchase them from the holders. The intermediary also may be authorized to borrow amounts for accrued interest when due and those amounts are added to the balance of the outstanding indebtedness. Interest is thus capitalized during the construction period at rates being charged by the lenders; however, it is deductible by the utility for tax purposes in the year of accrual. - Question: How should construction work in progress and related liabilities and interest expense being financed through a construction intermediary be reflected in an electric utility's financial statements? - Interpretive Response: The balance sheet of an electric utility company using a construction intermediary to finance construction should include the intermediary's work in progress in the appropriate caption under utility plant. The related debt should be included in long-term liabilities and disclosed either on the balance sheet or in a note. - The amount of interest cost incurred and the respective amounts expensed or capitalized shall be disclosed for each period for which an income statement is presented. Consequently, capitalized interest included as part of an intermediary's construction work in progress on the balance sheet should be recognized on the current income statement as interest expense with a corresponding offset to allowance for borrowed funds used during construction. Income statements for prior periods should also be restated. The amounts may be shown separately on the statement or included with interest expense and allowance for borrowed funds used during construction. - A note to the financial statements should describe briefly the organization and purpose of the intermediary and the nature of its authorization to incur debt to finance construction. The note should disclose the rate at which interest on this debt has been capitalized and the dollar amount for each period for which an income statement is presented.