{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/818/20/#40-derecognition","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":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"818-20-40-1","para":"40-1","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_kkh_qp2_y3c__GUID-F44FF821-2930-4239-8BDA-B45EA76E6105\"><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-EB066092-2CCC-450A-A3CC-354338C6F2F4\"><span class=\"sfragment-source\">An entity shall derecognize 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> in accordance with Subtopic <a altsource=\"GUID-D091412D-72D4-43F5-AF85-F4D69E8209AF.ditamap\" class=\"ditamap\">610-20</a> on gains and losses from the derecognition of nonfinancial assets unless a scope exception from that Subtopic applies. For example, a nonfinancial asset in a <a href=\"/glossary/c/#contract\" class=\"term\" title=\"An agreement between two or more parties that creates enforceable rights and obligations.\"><span>contract</span></a> with a <a href=\"/glossary/c/#customer\" class=\"term\" title=\"A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.\"><span>customer</span></a> shall be derecognized in accordance with Topic <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a> on revenue from contracts with customers. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1An entity shall derecognize an environmental credit in accordance with Subtopic 610-20 on gains and losses from the derecognition…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:17c2a9d1e6f6012d0ce92c42e8d766c3c42f91ee5e5e5edbea1f63ccb5bc0892","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb1e9194d8f4756239cf77c32d9e913e8a2bc65962e5f8fa236639faeffedd69","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}},{"block":null,"heading":"Asset Recognition Reassessment","paragraphs":[{"citation":"818-20-40-2","para":"40-2","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_d188e45__GUID-8D937468-F36D-4D51-83FC-0139A44A31BE\"><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-B0B4A7E2-016D-4135-B523-F6D7DFA9033B\"><span class=\"sfragment-source\">At each reporting date, an entity shall reassess whether environmental credits shall continue to be recognized as assets in accordance with paragraph <a href=\"/asc/818/20/#818-20-25-1\" class=\"xref\">818-20-25-1</a>. If an entity determines that it is no longer <a href=\"/glossary/p/#probable\" class=\"term\" title=\"The future event or events are likely to occur.\"><span>probable</span></a> that an 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>, the entity shall derecognize the environmental credit through earnings. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1At each reporting date, an entity shall reassess whether environmental credits shall continue to be recognized as assets in accor…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:258b03ad6a67869eada7096114b7acbba85dd5a1c2724a9f64bb9d1784d0205d","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}},{"citation":"818-20-40-3","para":"40-3","html":"<div class=\"asc-body\"><div class=\"div pending-text\" id=\"pgroup_d188e45__GUID-81DF5E0B-CDBE-4A4E-8756-F4C5DBA15D0C\"><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-E5B6A49F-9CDC-4DC0-A67C-607E012CDABC\"><span class=\"sfragment-source\">An entity is prohibited from recognizing an environmental credit as an asset if the entity previously determined that the environmental credit was not probable of being used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer. Therefore, an environmental credit previously derecognized or never recognized as an asset shall not subsequently be recognized as an asset. </span></span></div></div>","snippet":"Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:818-10-65-1An entity is prohibited from recognizing an environmental credit as an asset if the entity previously determined that the environ…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a6505eeea9fda51c008696c271e03307a711c3af811c16e9da3c06ce0f2607e","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f0774b9ba993282d40ff60261891d920ae3acb4cef893ff58c6682c8fdf66105","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:982812eccfe01c4b19699540bd3729923a8fb43aa2cc14e5d396839edf89927f","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:982812eccfe01c4b19699540bd3729923a8fb43aa2cc14e5d396839edf89927f","downloaded_from":"2026-09-10T01:42:22.130Z","last_downloaded_at":"2026-09-10T01:42:22.130Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147476118","source_sha256":"804da7b1a838ae0bfb145b6a3431838b07de4fd3b31ba07b7cc2b97fd1e6bd76"}}