{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/818/20/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"818","topic_title":"Environmental Credits and Environmental Credit Obligations","subtopic":"818-20","subtopic_title":"Environmental Credits","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"818-20-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_jwc_chd_y3c__GUID-D8C5DC05-A3B5-4DD9-AD75-58FECC87F61F\"><div class=\"div date-effective\"><span class=\"transition-header\">Transition date:</span><span class=\"p-alphabet\">(P) December 16, 2027; (N) December 16, 2028</span><span class=\"transition-header pipe-separator\">Transition guidance:</span></div><a href=\"/asc/818/10/#818-10-65-1\" class=\"xref\">818-10-65-1</a><span class=\"sfragment\" id=\"GUID-2BCA0F4A-73C6-46D1-BA73-A027D063ADF5\"><span class=\"sfragment-source\">An entity shall recognize an <a href=\"/glossary/e/#environmental-credit\" class=\"term\" title=\"(P) December 16, 2027; (N) December 16, 2028818-10-65-1An enforceable right that is acquired, internally generated, granted by a regulatory agency or its designee(s), or received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s) that meets all of the following criteria:Lacks physical substance and is not a financial asset.Is represented to prevent, control, reduce, or remove emissions or other pollution.Is, or previously was, separately transferable in an exchange transaction. If an item is no longer separately transferable in an exchange transaction, an entity must be able to use that item to satisfy an environmental credit obligation to meet this criterion.Is not an income tax credit that may be used to settle an entity’s income tax liability, regardless of whether the entity has a tax liability or intends to use the credit for that purpose.An environmental credit that meets the above criteria may exist in a variety of forms, including (but not limited to) credits, certificates, allowances, and offsets.\"><span>environmental credit</span></a> as an asset if it is <a href=\"/glossary/p/#probable\" class=\"term\" title=\"The future event or events are likely to occur.\"><span>probable</span></a> that the environmental credit will be used to settle an <a href=\"/glossary/e/#environmental-credit-obligation\" class=\"term\" title=\"(P) December 16, 2027; (N) December 16, 2028818-10-65-1A regulatory compliance obligation arising from existing or enacted laws, statutes, or ordinances represented to prevent, control, reduce, or remove emissions or other pollution that may be settled with environmental credits. Obligations within the scope of Subtopic 410-30 are not environmental credit obligations.\"><span>environmental credit obligation</span></a>, transferred in an <a href=\"/glossary/e/#exchange\" class=\"term\" title=\"An exchange (or exchange transaction) is a reciprocal transfer between two entities that results in one of the entities acquiring assets or services or satisfying liabilities by surrendering other assets or services or incurring other obligations.\"><span>exchange</span></a> transaction, or used in a <a href=\"/glossary/n/#nonreciprocal-transfer\" class=\"term\" title=\"Nonreciprocal transfer is a transfer of assets or services in one direction, either from an entity to its owners (whether or not in exchange for their ownership interests) or to another entity, or from owners or another entity to the entity. An entity's reacquisition of its outstanding stock is an example of a nonreciprocal transfer.\"><span>nonreciprocal transfer</span></a>. For all other environmental credits, an entity shall recognize an expense when costs are incurred and is prohibited from including those costs in the carrying amount of another asset accounted for in accordance with another Topic. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1An entity shall recognize an environmental credit as an asset if it is probable that the environmental credit will be used to set…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61c86bc4aa364b57050fb46d4edadfa9d4ed790f4f96d9d3bb32bfe248973762","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}},{"citation":"818-20-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_jwc_chd_y3c__GUID-82A1B8B3-907D-49C9-BE27-94D1B6895D06\"><div class=\"div date-effective\"><span class=\"transition-header\">Transition date:</span><span class=\"p-alphabet\">(P) December 16, 2027; (N) December 16, 2028</span><span class=\"transition-header pipe-separator\">Transition guidance:</span></div><a href=\"/asc/818/10/#818-10-65-1\" class=\"xref\">818-10-65-1</a><span class=\"sfragment\" id=\"GUID-F0179FF4-7CDC-4CD3-AA07-D5FACA21ACD1\"><span class=\"sfragment-source\">An entity that recognizes an environmental credit as an asset in accordance with paragraph <a href=\"/asc/818/20/#818-20-25-1\" class=\"xref\">818-20-25-1</a> shall classify an environmental credit that is probable of being used to settle an environmental credit obligation as a <a href=\"/glossary/c/#compliance-environmental-credit\" class=\"term\" title=\"(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 and probable of being used to settle an environmental credit obligation.\"><span>compliance environmental credit</span></a>. All other environmental credits recognized as assets shall be classified as <a href=\"/glossary/n/#noncompliance-environmental-credit\" class=\"term\" title=\"(P) December 16, 2027; (N) December 16, 2028818-10-65-1An environmental credit recognized as an asset in accordance with Topic 818 that is not a compliance environmental credit.\"><span>noncompliance environmental credits</span></a>. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1An entity that recognizes an environmental credit as an asset in accordance with paragraph 818-20-25-1 shall classify an environm…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c02207461bbb31e95f5cbcd2f9b841c274d67f25d2bd044583a8517bbe0fc5bb","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}},{"citation":"818-20-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_jwc_chd_y3c__GUID-FBFB4F2A-8AB2-42BE-B3D4-E9DC8F8B16B3\"><div class=\"div date-effective\"><span class=\"transition-header\">Transition date:</span><span class=\"p-alphabet\">(P) December 16, 2027; (N) December 16, 2028</span><span class=\"transition-header pipe-separator\">Transition guidance:</span></div><a href=\"/asc/818/10/#818-10-65-1\" class=\"xref\">818-10-65-1</a><span class=\"sfragment\" id=\"GUID-424C6423-32ED-4498-981A-AC8CCF7D6651\"><span class=\"sfragment-source\">An entity shall recognize an expense for a nonrefundable deposit made to obtain an environmental credit for which it is not probable that the entity will use the environmental credit: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"GUID-AE85AD92-7847-488F-B30C-5A0EA76BD756\"><span class=\"sfragment-source\">To settle an environmental credit obligation </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"GUID-A0ADA996-F64D-4E1A-829C-218A3C48A1F3\"><span class=\"sfragment-source\">To transfer in an exchange transaction </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"GUID-A1AB9BF0-540F-42CE-9471-4FC9D3F9EE68\"><span class=\"sfragment-source\">In a nonreciprocal transfer. </span></span></div></li></ol></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1An entity shall recognize an expense for a nonrefundable deposit made to obtain an environmental credit for which it is not proba…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:975a3dd7ab86e6c2673e413b1de3d79d611f9038999657aac61bb8b0c83c17c2","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}},{"citation":"818-20-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_jwc_chd_y3c__GUID-2AD2B32B-021B-44A4-8816-4D30CE1E1029\"><div class=\"div date-effective\"><span class=\"transition-header\">Transition date:</span><span class=\"p-alphabet\">(P) December 16, 2027; (N) December 16, 2028</span><span class=\"transition-header pipe-separator\">Transition guidance:</span></div><a href=\"/asc/818/10/#818-10-65-1\" class=\"xref\">818-10-65-1</a><span class=\"sfragment\" id=\"GUID-D80F949E-E207-4BC1-AF4A-5938D1E94C9C\"><span class=\"sfragment-source\">See paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/818/20/#818-20-55-2\" class=\"xref\">818-20-55-2 through 55-3</a></div> for implementation guidance on the application of asset recognition. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1See paragraphs 818-20-55-2 through 55-3 for implementation guidance on the application of asset recognition.","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a20adf5c4db407842d400dc2974814c8e854ebcd68ad9e16b03d6055afc7f96a","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}},{"citation":"818-20-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_jwc_chd_y3c__GUID-4FF05154-0531-452C-A7EC-C9F162D645CD\"><div class=\"div date-effective\"><span class=\"transition-header\">Transition date:</span><span class=\"p-alphabet\">(P) December 16, 2027; (N) December 16, 2028</span><span class=\"transition-header pipe-separator\">Transition guidance:</span></div><a href=\"/asc/818/10/#818-10-65-1\" class=\"xref\">818-10-65-1</a><span class=\"sfragment\" id=\"GUID-C1A78238-C05F-416C-85F2-E683D5EF3AE8\"><span class=\"sfragment-source\">The recognition guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/818/20/#818-20-25-1\" class=\"xref\">818-20-25-1 through 25-2</a></div> is not required to be applied at the individual environmental credit level. See paragraph <a href=\"/asc/818/20/#818-20-55-4\" class=\"xref\">818-20-55-4</a> for implementation guidance on the application of this paragraph. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1The recognition guidance in paragraphs 818-20-25-1 through 25-2 is not required to be applied at the individual environmental cre…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:be739c25e2886edd96f301f26eb35ce0d6f8108c64091454236d9ba09528d14d","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb5350e50379fbbe060354fdd8ec2284f78970270faee62c2309064aacd05a16","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d2d0c53f75220234723a9a4eb0dddabd67292874f4ff9483a3aa10cd4ce4b350","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d2d0c53f75220234723a9a4eb0dddabd67292874f4ff9483a3aa10cd4ce4b350","downloaded_from":"2026-09-10T01:42:13.310Z","last_downloaded_at":"2026-09-10T01:42:13.310Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476110","source_sha256":"729306c6edc5c5fa69728ad94104aa89471a542952d9871f4ed2a6dd75d42fd3"}}