# ASC Topic 818: Environmental Credits and Environmental Credit Obligations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/818/) 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): 2026-09-10T01:41:37.561Z to 2026-09-10T01:43:08.971Z Record version: sha256:f123155103fc7cced8fab0c09a66d08b672edd2bb31156b063ff6e5d54d3a715 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 818 (created by ASU 2026-02) is a new Topic providing dedicated accounting for environmental credits — emissions allowances, carbon offsets, renewable energy certificates, RINs — and for the environmental credit obligations created by regulatory compliance programs such as cap-and-trade and renewable portfolio or fuel standards; items in its scope are excluded from Topic 815 derivatives accounting (818-10-15-3). Subtopic 818-20 permits asset recognition of a credit only if it is probable the credit will be used to settle an obligation, transferred in an exchange, or used in a nonreciprocal transfer, then splits recognized credits into compliance credits (not remeasured) and noncompliance credits (impairment-tested, with an optional fair value election by class); costs that fail the probable test are expensed and can never be capitalized. Subtopic 818-30 requires a liability once events on or before the reporting date create an obligation measured as if the reporting date were the end of the compliance period, and measures it in two pieces: a funded portion at the carrying amount of compliance credits on hand and an unfunded portion at the fair value of credits still needed (or cash settlement amount/estimated cost basis in limited cases). The unifying idea is that credits and obligations are accounted for separately — a cost-based, "probable use" asset model paired with a partly fair-value liability model — with expected future activities ignored in measurement and gross presentation of assets and liabilities required. Source downloaded (UTC): 2026-09-10T01:41:37.561Z to 2026-09-10T01:41:59.282Z Record version: sha256:122984a4c8dc399b425b396d3186bb264a19d3d7da1a5afdbbfb774e7ba3b4af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10: Environmental Credits and Environmental Credit Obligations — Overall ### Machine-generated study aids ```json { "summary": "ASC 818-10 is the Overall subtopic of the new Environmental Credits and Environmental Credit Obligations Topic (created by ASU 2026-02), which sets the accounting and reporting requirements for entities that acquire, internally generate, or receive environmental credits and for entities subject to regulatory compliance programs (e.g., cap-and-trade, renewable portfolio or fuel standards) that create environmental credit obligations. It applies to all environmental credits and environmental credit obligations, and items within its scope are excluded from derivatives accounting under Topic 815. The objective is to give investors useful information about the amount, timing, and uncertainty of cash flows from these transactions.", "key_points": [ "Topic 818 comprises three Subtopics — Overall (818-10), Environmental Credits (818-20), and Environmental Credit Obligations (818-30) (818-10-05-1).", "The guidance applies to all environmental credits and environmental credit obligations, which are used to settle environmental credit obligations, transferred in exchange transactions, used in nonreciprocal transfers, or used for voluntary purposes (818-10-05-3; 818-10-15-1).", "Items within the scope of Topic 818 are outside the scope of Topic 815 on derivatives and hedging per 815-10-15-82B (818-10-15-3).", "Separate transferability does not require an active market, and the length of time an item is transferable is irrelevant — an item transferable only momentarily before retirement still qualifies if the other criteria in the environmental credit definition are met (818-10-55-1).", "In applying the Topic, an entity considers the rights provided by the environmental credits it obtains and the terms and conditions of the regulatory compliance programs creating the obligations (818-10-10-1).", "Effective for public business entities in annual periods beginning after December 15, 2027, and for other entities after December 15, 2028, with early adoption permitted as of the beginning of the annual period (818-10-65-1(a)–(c)).", "Transition is retrospective through a cumulative-effect adjustment to opening retained earnings; a credit is recognized as an asset at the date of initial application only if it is probable it will be used to settle an obligation, transferred in an exchange, or used in a nonreciprocal transfer, with compliance credits carried at existing carrying amount and noncompliance credits at the lower of carrying amount and fair value (818-10-65-1(d)–(f))." ], "categories": [ "Recognition", "Subsequent measurement", "Transition and effective dates", "Financial instruments" ], "audience_level": "intermediate", "student_note": "This is brand-new guidance (ASU 2026-02) that finally gives carbon allowances and renewable energy credits their own model instead of forcing them into inventory, intangibles, or derivatives analogies. A common misunderstanding is assuming an active market or extended transferability is needed for an item to be an environmental credit — 818-10-55-1 says even momentary transferability before immediate retirement suffices.", "related_topics": [ "818-20", "818-30", "815-10", "805-20", "330", "250-10" ], "key_concepts": [ "environmental credit", "environmental credit obligation", "regulatory compliance program", "cap-and-trade", "compliance versus noncompliance environmental credits", "separately transferable", "nonreciprocal transfer", "cumulative-effect transition adjustment" ] } ``` Source downloaded (UTC): 2026-09-10T01:41:37.561Z to 2026-09-10T01:41:37.561Z Record version: sha256:913d74688d210d4433dff9b652bdf6867ba0f5796608de9e46ffc979eceae41f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/818/10/#00-status) SEC content: no ##### [818-10-00-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:37.561Z to 2026-09-10T01:41:37.561Z Record version: sha256:4a65135dc2bd1e94f60da8726b5a12a58b6cb1fcea553b51b3262c03741f8d7d 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
Active MarketAddedAccounting Standards Update No. 2026-0205/19/2026
Compliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental Credit ObligationAddedAccounting Standards Update No. 2026-0205/19/2026
ExchangeAddedAccounting Standards Update No. 2026-0205/19/2026
Fair Value (2nd def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Financial AssetAddedAccounting Standards Update No. 2026-0205/19/2026
Income TaxesAddedAccounting Standards Update No. 2026-0205/19/2026
Market ParticipantsAddedAccounting Standards Update No. 2026-0205/19/2026
Noncompliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Nonreciprocal Transfer (1st def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Orderly TransactionAddedAccounting Standards Update No. 2026-0205/19/2026
ProbableAddedAccounting Standards Update No. 2026-0205/19/2026
Related PartiesAddedAccounting Standards Update No. 2026-0205/19/2026
818-10-05-1 through 05-3
AddedAccounting Standards Update No. 2026-0205/19/2026
818-10-10-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-10-15-1 through 15-3
AddedAccounting Standards Update No. 2026-0205/19/2026
818-10-55-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-10-65-1AddedAccounting Standards Update No. 2026-0205/19/2026
Source downloaded (UTC): 2026-09-10T01:41:41.658Z to 2026-09-10T01:41:41.658Z Record version: sha256:830f23a8cce55122fa2c11e5830f47d7519af13065db60e68edf0eb081cdf391 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/818/10/#05-overview-and-background) SEC content: no ##### [818-10-05-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-05-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:41.658Z to 2026-09-10T01:41:41.658Z Record version: sha256:63aa14c62f9475a913b1bee8887f6bdec52e85b2bdfbb3665f36c3bf81b7b708 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The Environmental Credits and Environmental Credit Obligations Topic includes the following Subtopics: 1. a Overall 2. b Environmental Credits 3. c Environmental Credit Obligations. ##### [818-10-05-2](https://asc.understandingaccounting.org/asc/818/10/#818-10-05-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:41.658Z to 2026-09-10T01:41:41.658Z Record version: sha256:002e0cb571848a7e6d38200af5f0e144b2041d63952ef919cea8a96312bc2c4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The Subtopics listed in paragraph [818-10-05-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-05-1) establish the financial accounting and reporting requirements for entities that obtain or generate an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") or are subject to regulatory compliance programs (for example, cap-and-trade, renewable portfolio standards, or renewable fuel standards) that result in an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). ##### [818-10-05-3](https://asc.understandingaccounting.org/asc/818/10/#818-10-05-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:41.658Z to 2026-09-10T01:41:41.658Z Record version: sha256:34ca77b3fd8fbc7a0577a791145cf1ee245f8106475f72ab6abd967cf5d9f8df Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Entities engage in a variety of transactions that involve environmental credits. Environmental credits are acquired, internally generated, granted by a regulator or its designee(s), or received in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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.") that is not a grant from a regulator or its designee(s). Entities use those environmental credits: 1. a To settle environmental credit obligations 2. b To transfer in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction 3. c In a nonreciprocal transfer 4. d To meet voluntary environmental initiatives (referred to as using environmental credits for voluntary purposes). Source downloaded (UTC): 2026-09-10T01:41:44.782Z to 2026-09-10T01:41:44.782Z Record version: sha256:93a12eaf5e5ae96dde2ba422599ed3174baf988ec2cd1e7fe2e4ad752a38c0d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/818/10/#10-objectives) SEC content: no ##### [818-10-10-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-10-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:44.782Z to 2026-09-10T01:41:44.782Z Record version: sha256:e05745cec1e3892ccf840a688fb6550f1f2b7b0a7b56a14b2b744403353a84e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)This Topic specifies the financial accounting and reporting requirements for transactions and arrangements involving [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") and [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") with the objective of providing investors with useful information about the amount, timing, and uncertainty of cash flows arising from those transactions. An entity should consider the rights provided by the environmental credits it obtains and the terms and conditions of the regulatory compliance programs that result in environmental credit obligations when applying this Topic. Source downloaded (UTC): 2026-09-10T01:41:47.182Z to 2026-09-10T01:41:47.182Z Record version: sha256:dd23ff9d19916c7b6b4a1b0baa3c57837be300f3023f2c01a6d4849ea9487cd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/818/10/#15-scope-and-scope-exceptions) SEC content: no ##### [818-10-15-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-15-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:47.182Z to 2026-09-10T01:41:47.182Z Record version: sha256:55fb21f31b7dd6f8360c05c8f5b8e3fe49ed952c399521d301036d39aba77d1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The guidance in this Topic applies to all [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") and [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). ##### [818-10-15-2](https://asc.understandingaccounting.org/asc/818/10/#818-10-15-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:47.182Z to 2026-09-10T01:41:47.182Z Record version: sha256:9b8c732d9c9559736067669b94882fdb62c0c4291d488cbc63be64c75111bcc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraph [818-10-55-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-55-1) for implementation guidance on the application of the scope of this Topic. #### Other Considerations ##### [818-10-15-3](https://asc.understandingaccounting.org/asc/818/10/#818-10-15-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:47.182Z to 2026-09-10T01:41:47.182Z Record version: sha256:8fb45af7221a0917ff89ae0e8c79aa7217ebf21d446d8eb173ed21e2ee7a42ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Environmental credits and environmental credit obligations that are within the scope of this Topic are outside the scope of Topic 815 on derivatives and hedging in accordance with paragraph [815-10-15-82B](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-82B). Source downloaded (UTC): 2026-09-10T01:41:54.465Z to 2026-09-10T01:41:54.465Z Record version: sha256:3687ae425efc3aee64f8750001f6ea6a127dc482f618a621dc302dc9271a81b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/818/10/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [818-10-55-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-55-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:41:54.465Z to 2026-09-10T01:41:54.465Z Record version: sha256:b63eca9e12eb75294fb481c84a6f759b677339ac693f384052d07fdad3a2e9bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The existence of [active markets](https://asc.understandingaccounting.org/glossary/a/#active-market "A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.") is not a requirement when determining whether an item that may be an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") is separately transferable in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction. Additionally, the length of time that an item is transferable should not be considered for that purpose. In certain instances, an item may only be separately transferable momentarily because an entity retires the item immediately after obtaining it or instructs another party, such as a broker, to do so. That item would be subject to the provisions of this Topic if all other criteria in the environmental credit definition are met. Source downloaded (UTC): 2026-09-10T01:41:56.362Z to 2026-09-10T01:41:56.362Z Record version: sha256:639a7ed9e9a3f37c7e23c7c9851d22c19db10034ce449f509c8edf095b80354d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/818/10/#65-transition-and-open-effective-date-information) SEC content: no #### Transition Related to Accounting Standards Update No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) ##### [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:56.362Z to 2026-09-10T01:41:56.362Z Record version: sha256:b53c9d94625a0edfa00925078bdef71644191876d0eaf53456bb678dba3ec292 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Accounting Standards Update 2026-02](https://asc.understandingaccounting.org/updates/asu-2026-02/) 2027-06-30 2027-12-16 2027-12-16 2027-12-16 2027-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 2028-12-16 The following represents the transition and effective date information related to Accounting Standards Update No. 2026-02, _Environmental Credits and Environmental Credit Obligations (Topic 818)_: **Effective date and early adoption** 1. a Public business entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. 2. b Entities other than public business entities shall apply the pending content that links to this paragraph for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. 3. c Early adoption of the pending content that links to this paragraph is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts the pending content that links to this paragraph in an interim reporting period, it shall adopt the pending content as of the beginning of the annual reporting period that includes that interim reporting period. **Transition method** 1. d An entity shall apply the pending content that links to this paragraph on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets on the balance sheet) as of the beginning of the annual reporting period of adoption, subject to the guidance in (e) through (i). The date of initial application shall be the beginning of the annual reporting period in which the entity first applies the pending content that links to this paragraph. 2. e An entity shall recognize an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") as an asset at the date of initial application of the pending content that links to this paragraph if it is probable at that date that the environmental credit will be used to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."), transferred in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, or used in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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."). For all other environmental credits, an entity shall derecognize the carrying amount of those environmental credits at the date of initial application unless those environmental credits are within the scope of (g). In addition, at the date of initial application, an entity shall derecognize the carrying amount of an asset recognized for a nonrefundable deposit made to obtain an environmental credit if it is not probable that the environmental credit will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer. 3. f An entity shall measure an environmental credit recognized as an asset at the date of initial application of the pending content that links to this paragraph in accordance with (e) as follows: 1. 1 An environmental credit that is classified as a [compliance environmental credit](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") at the date of initial application of the pending content that links to this paragraph shall be measured using the entity’s carrying amount of that environmental credit existing at the date of initial application. 2. 2 An environmental credit that is classified as a [noncompliance environmental credit](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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.") at the date of initial application of the pending content that links to this paragraph shall be measured at the lower of the entity’s carrying amount of the environmental credit existing at the date of initial application and the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the environmental credit at the date of initial application. 3. 3 Notwithstanding the requirements of (f)(1) and (f)(2), an entity may make an entity-wide election to measure those environmental credits that were internally generated by the entity or received through a grant from a regulator or its designee(s) at the amount of the transaction costs incurred in accordance with paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1). 4. 4 Notwithstanding the requirements of (f)(2), an entity that elects an accounting policy to subsequently measure a class of eligible noncompliance environmental credits at fair value shall measure those environmental credits at fair value at the date of initial application of the pending content that links to this paragraph. 4. g An entity shall continue to include the cost of environmental credits capitalized as part of another asset accounted for in accordance with another Topic (for example, Topic 330 on inventory) before the date of initial application of the pending content that links to this paragraph as part of the carrying amount of that other asset. 5. h An entity shall apply the liability recognition and measurement requirements of Subtopic 818-30 on environmental credit obligations at the date of initial application of the pending content that links to this paragraph. 6. i An entity shall apply the pending content in paragraphs [805-20-25-15B through 25-15D](https://asc.understandingaccounting.org/asc/805/20/#805-20-25-15B) and [805-20-30-32](https://asc.understandingaccounting.org/asc/805/20/#805-20-30-32) prospectively to transactions accounted for as business combinations occurring after the date of initial application of the pending content that links to this paragraph. **Transition disclosures** 1. j An entity shall provide the transition disclosures required by paragraph [250-10-50-1(a), (b)(3), and (c)](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1) and paragraph [250-10-50-2](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-2). The transition disclosure required by paragraph [250-10-50-1(b)(3)](https://asc.understandingaccounting.org/asc/250/10/#250-10-50-1) shall be as of the beginning of the annual reporting period of adoption rather than as of the beginning of the earliest period presented. Source downloaded (UTC): 2026-09-10T01:42:02.300Z to 2026-09-10T01:42:33.080Z Record version: sha256:5c3255a93ad5f9dc8d546b3ba33a69340200c1a16196ac53bc8be032b219b325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20: Environmental Credits and Environmental Credit Obligations — Environmental Credits ### Machine-generated study aids ```json { "summary": "ASC 818-20 governs the accounting for environmental credits (e.g., emissions allowances, carbon offsets, renewable energy certificates, RINs). An environmental credit is recognized as an asset only if it is probable it will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer; otherwise the cost is expensed as incurred and can never later be capitalized. Credits recognized as assets are classified as compliance credits (not remeasured) or noncompliance credits (tested for impairment each reporting date, with an optional fair value policy election by class for eligible credits).", "key_points": [ "An environmental credit is recognized as an asset only if it is probable it will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer; all other credits (and nonrefundable deposits for such credits) are expensed as costs are incurred and may not be added to the carrying amount of another asset (818-20-25-1; 25-3).", "Credits recognized as assets are classified as compliance environmental credits if probable of being used to settle an environmental credit obligation, and as noncompliance environmental credits otherwise; the probability assessment is collective and need not be made credit by credit (818-20-25-2; 25-5; 55-2; 55-4).", "Initial measurement: internally generated credits and credits granted by a regulator or its designee are measured at transaction costs incurred, if any (zero if none); credits obtained in a transaction measured under another Topic follow that Topic; all others are measured at cost under 805-50-30-1 through 30-4 (818-20-30-1 through 30-3; 55-5).", "Compliance environmental credits are not subsequently remeasured; noncompliance environmental credits are tested for impairment at each reporting date, with loss equal to the excess of carrying value over fair value and reversal prohibited; no credit is amortized (818-20-35-3; 35-4; 35-6).", "Similar credits are subsequently measured using average cost, FIFO, or specific identification, applied separately to compliance and noncompliance credits (818-20-35-2).", "An entity may elect, by class, to measure eligible noncompliance credits (obtained in an exchange transaction, a nonreciprocal transfer other than a regulator grant, or a business combination) at fair value through earnings; that measurement continues until derecognition, even if later reclassified as compliance credits, and a change to the policy is applied prospectively with a cumulative-effect adjustment to retained earnings (818-20-35-7 through 35-10; 55-7; 55-8).", "Derecognition follows Subtopic 610-20 (or Topic 606 for contracts with customers); if it is no longer probable a credit will be used, transferred, or nonreciprocally transferred, it is derecognized through earnings and can never be re-recognized as an asset (818-20-40-1 through 40-3)." ], "categories": [ "Recognition", "Initial measurement", "Subsequent measurement", "Impairment" ], "audience_level": "intermediate", "student_note": "This is new guidance (effective for fiscal years beginning after Dec. 16, 2027 for public entities) creating a distinct asset model for carbon credits and allowances. The classic trap: regulator-granted and internally generated credits are measured at transaction costs (often zero) and are never eligible for the fair value election, and once a credit fails the probable test it is expensed permanently — no later capitalization or impairment reversal.", "related_topics": [ "818-10", "818-30", "610-20", "805-50", "820", "250" ], "key_concepts": [ "environmental credit", "compliance environmental credit", "noncompliance environmental credit", "probable use assessment", "transaction costs", "fair value policy election by class", "impairment without reversal", "costing methods" ] } ``` Source downloaded (UTC): 2026-09-10T01:42:02.300Z to 2026-09-10T01:42:02.300Z Record version: sha256:a8a2b3cd784d2fba02f9e36a1c98e3e12e2eecd570746b85769d3f4ab7c528ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/818/20/#00-status) SEC content: no ##### [818-20-00-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:42:02.300Z to 2026-09-10T01:42:02.300Z Record version: sha256:5e0ea125084c8906ed6bd7b88ed7aee744f533a1fc3b2e7e098f3d63ee5d2dcf 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
AcquireeAddedAccounting Standards Update No. 2026-0205/19/2026
AcquirerAddedAccounting Standards Update No. 2026-0205/19/2026
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2026-0205/19/2026
BusinessAddedAccounting Standards Update No. 2026-0205/19/2026
Business CombinationAddedAccounting Standards Update No. 2026-0205/19/2026
Compliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
ContractAddedAccounting Standards Update No. 2026-0205/19/2026
CustomerAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental Credit ObligationAddedAccounting Standards Update No. 2026-0205/19/2026
ExchangeAddedAccounting Standards Update No. 2026-0205/19/2026
Fair Value (2nd def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Financial AssetAddedAccounting Standards Update No. 2026-0205/19/2026
Income TaxesAddedAccounting Standards Update No. 2026-0205/19/2026
Market ParticipantsAddedAccounting Standards Update No. 2026-0205/19/2026
Noncompliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Nonreciprocal Transfer (1st def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Not-for-Profit EntityAddedAccounting Standards Update No. 2026-0205/19/2026
Operating CycleAddedAccounting Standards Update No. 2026-0205/19/2026
Orderly TransactionAddedAccounting Standards Update No. 2026-0205/19/2026
ProbableAddedAccounting Standards Update No. 2026-0205/19/2026
Related PartiesAddedAccounting Standards Update No. 2026-0205/19/2026
818-20-05-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-15-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-25-1 through 25-5
AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-30-1 through 30-3
AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-35-1 through 35-10
AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-40-1 through 40-3
AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-45-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-45-2AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-50-1 through 50-6
AddedAccounting Standards Update No. 2026-0205/19/2026
818-20-55-1 through 55-14
AddedAccounting Standards Update No. 2026-0205/19/2026
Source downloaded (UTC): 2026-09-10T01:42:04.181Z to 2026-09-10T01:42:04.181Z Record version: sha256:d8eac502d6b5bf56b6cd41571a871ed3556040eebf4c5567fe81685177c36ff7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/818/20/#05-overview-and-background) SEC content: no ##### [818-20-05-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-05-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:04.181Z to 2026-09-10T01:42:04.181Z Record version: sha256:8da470c76b6eb32b967ba165b254bd6eccce8e09f8a07d409bb82a2feb8615c9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)This Subtopic addresses the accounting for an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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."). Paragraph [818-20-55-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-1) provides a flowchart of the recognition and measurement requirements of this Subtopic. Source downloaded (UTC): 2026-09-10T01:42:07.777Z to 2026-09-10T01:42:07.777Z Record version: sha256:856a6202d478b7dd0025f806a439f0466a2ffd7a6581a3aa4eed0cb23478bf23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/818/20/#15-scope-and-scope-exceptions) SEC content: no ##### [818-20-15-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-15-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:07.777Z to 2026-09-10T01:42:07.777Z Record version: sha256:1cd931bb5ba5929a8ca8a68380809fba520ce07f66acc9375b0bee076804814b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)This Subtopic follows the same Scope and Scope Exceptions as the Overall Subtopic. Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:d2d0c53f75220234723a9a4eb0dddabd67292874f4ff9483a3aa10cd4ce4b350 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/818/20/#25-recognition) SEC content: no ##### [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:61c86bc4aa364b57050fb46d4edadfa9d4ed790f4f96d9d3bb32bfe248973762 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall recognize an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") as an asset if it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the environmental credit will be used to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."), transferred in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, or used in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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."). 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. ##### [818-20-25-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:c02207461bbb31e95f5cbcd2f9b841c274d67f25d2bd044583a8517bbe0fc5bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity that recognizes an environmental credit as an asset in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) shall classify an environmental credit that is probable of being used to settle an environmental credit obligation as a [compliance environmental credit](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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."). All other environmental credits recognized as assets shall be classified as [noncompliance environmental credits](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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."). ##### [818-20-25-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:975a3dd7ab86e6c2673e413b1de3d79d611f9038999657aac61bb8b0c83c17c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)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: 1. a To settle an environmental credit obligation 2. b To transfer in an exchange transaction 3. c In a nonreciprocal transfer. ##### [818-20-25-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:a20adf5c4db407842d400dc2974814c8e854ebcd68ad9e16b03d6055afc7f96a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraphs [818-20-55-2 through 55-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-2) for implementation guidance on the application of asset recognition. ##### [818-20-25-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:13.310Z to 2026-09-10T01:42:13.310Z Record version: sha256:be739c25e2886edd96f301f26eb35ce0d6f8108c64091454236d9ba09528d14d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The recognition guidance in paragraphs [818-20-25-1 through 25-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) is not required to be applied at the individual environmental credit level. See paragraph [818-20-55-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-4) for implementation guidance on the application of this paragraph. Source downloaded (UTC): 2026-09-10T01:42:17.279Z to 2026-09-10T01:42:17.279Z Record version: sha256:104f17d3a88eae513ed05f5cd4fb7bdc76a77ec70b8261bfcce3dc41fe25b68e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/818/20/#30-initial-measurement) SEC content: no ##### [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:17.279Z to 2026-09-10T01:42:17.279Z Record version: sha256:a6ad2f27d75ee6091ae7f180b4dcd4a85b7ea32a4b0961e8ba12087bae42baff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") that is internally generated by an entity or received through a grant from a regulator or its designee(s) shall be initially measured at the transaction costs incurred, if any. See paragraph [818-20-55-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-5) for implementation guidance on the application of this paragraph. ##### [818-20-30-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:17.279Z to 2026-09-10T01:42:17.279Z Record version: sha256:0a53f6bbd569379f637208e2be70c4d7f16692c47ce42c0649ea67389ff650bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Environmental credits other than those measured in accordance with paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1) that are obtained in a transaction initially measured in accordance with another Topic shall follow the requirements of that other Topic. See paragraph [818-20-55-6](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-6) for implementation guidance on the application of this paragraph. ##### [818-20-30-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:17.279Z to 2026-09-10T01:42:17.279Z Record version: sha256:ee05863d565cee858adea8221885854de34d37c27eb9a6b80c9e68bc82759c2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Environmental credits other than those measured in accordance with paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1) or [818-20-30-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-2) shall be initially measured at cost in accordance with paragraphs [805-50-30-1 through 30-4](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-1) . Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:9e9902b6e56e4d56c5ba8b08a4def2628d3ac9f0d8898779f61f5ccdf27bd979 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/818/20/#35-subsequent-measurement) SEC content: no ##### [818-20-35-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:61f57fb4333cd46e04d919c005aa2b432f5069de008bdefb8ab34380bebc2980 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Before applying the subsequent measurement requirements of this Subtopic, an entity shall apply the asset recognition reassessment requirements in paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2) at each reporting date. ##### [818-20-35-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:2f217b2d6466f4b5dd43cf78bbd7a40ac5901e11fdbedfaa5363c6d36162fb8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall subsequently measure similar [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") recognized as assets using one of the following costing methods: 1. a Average cost 2. b First-in, first-out 3. c Specific identification. An entity shall apply the costing methods in (a) through (c) separately for [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") measured in accordance with paragraph [818-20-35-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-3) and [noncompliance environmental credits](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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.") measured in accordance with paragraph [818-20-35-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-4). ##### [818-20-35-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:87a2a8aefb51711ea651a975512a99065af6727a9d847abd19a59cd74f5f02a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall determine at each reporting date whether it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that an environmental credit recognized as an asset will be used to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). If it is probable, the environmental credit shall be classified as a compliance environmental credit and shall not be subsequently remeasured. ##### [818-20-35-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:a19dd56e6db650b9e218cf6d821c447f3d040d03671fb1e60968ed1144a6ef24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)All other environmental credits recognized as assets shall be classified as noncompliance environmental credits and tested for impairment at each reporting date. An entity shall recognize an impairment loss when the carrying value of the noncompliance environmental credit exceeds its [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."). The impairment loss shall be measured as the excess of the carrying value over fair value. Subsequent reversal of a previously recognized impairment loss is prohibited. ##### [818-20-35-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:39ee4e370209797c643d629cdc19873464504fa67235f3db98cc53ee6e95f305 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)If an environmental credit is reclassified from a compliance environmental credit to a noncompliance environmental credit or vice versa, an entity shall apply the impairment requirements in paragraph [818-20-35-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-4) before applying the subsequent measurement guidance related to the new classification of the environmental credit. ##### [818-20-35-6](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:121f4ead49afa12fc364aede9fa887519bfc5b9fe52781419d6cd007f468c68b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall not amortize an environmental credit. #### Fair Value Measurement Accounting Policy Election ##### [818-20-35-7](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-7) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:65a020c8edee91d8e5f794fe177112457be2356bf33618f4e7712f58effc661b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Notwithstanding the requirements of paragraphs [818-20-35-4 through 35-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-4) , an entity may elect an accounting policy by class to subsequently measure a class of eligible (see paragraph [818-20-35-9](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-9)) noncompliance environmental credits at fair value at each reporting date, with changes in fair value recognized in earnings. An entity should determine what constitutes a class based on its specific facts and circumstances. ##### [818-20-35-8](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-8) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:337545c5165851e758647cbc4fe6ee777b4f9f50022617c37eab231b6f6f9eff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An environmental credit subsequently measured at fair value in accordance with paragraph [818-20-35-7](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-7) shall continue to be measured at fair value at each reporting date until that environmental credit is derecognized. See paragraph [818-20-55-8](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-8) for implementation guidance on the application of this paragraph. ##### [818-20-35-9](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:22f7312acb9285ef4c24397f3c0e4ed7dc753d6d5ae401e2df169b1b4500357e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)To be eligible for subsequent fair value measurement, a noncompliance environmental credit shall be obtained through one of the following: 1. a An [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction 2. b A [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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.") that is not a grant from a regulator or its designee(s) 3. c A [business combination](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity."). See paragraph [818-20-55-7](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-7) for implementation guidance on the application of this paragraph. ##### [818-20-35-10](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:19.057Z to 2026-09-10T01:42:19.057Z Record version: sha256:e6462bdd420794e9d923afca35aac648a2ada0328e0b6756249448925e244897 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)A change in accounting policy to elect fair value measurement shall be subject to the guidance in Topic 250 on accounting changes and error corrections, including the requirements related to a change in accounting policy in an interim period in paragraphs [250-10-45-14 through 45-16](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-14) . However, notwithstanding the requirements of paragraph [250-10-45-5](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-5), an entity that elects to change its accounting policy to subsequently measure a class of eligible noncompliance environmental credits at fair value shall apply that fair value measurement accounting policy prospectively, with a cumulative-effect adjustment to retained earnings as of the beginning of the annual reporting period in which the change is made. The change shall not be retrospectively applied to prior annual reporting periods. The adjustment to retained earnings shall be determined in accordance with Topic 250 and shall include the difference between the fair value and the carrying amount of all affected noncompliance environmental credits at the beginning of the annual reporting period in which the fair value measurement accounting policy change is made. The initial adoption of an accounting policy for a class of eligible noncompliance environmental credits is not a change in accounting policy subject to the guidance in Topic 250. Source downloaded (UTC): 2026-09-10T01:42:22.130Z to 2026-09-10T01:42:22.130Z Record version: sha256:982812eccfe01c4b19699540bd3729923a8fb43aa2cc14e5d396839edf89927f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/818/20/#40-derecognition) SEC content: no ##### [818-20-40-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:22.130Z to 2026-09-10T01:42:22.130Z Record version: sha256:17c2a9d1e6f6012d0ce92c42e8d766c3c42f91ee5e5e5edbea1f63ccb5bc0892 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall derecognize an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") in accordance with Subtopic 610-20 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 [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "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.") shall be derecognized in accordance with Topic 606 on revenue from contracts with customers. #### Asset Recognition Reassessment ##### [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:22.130Z to 2026-09-10T01:42:22.130Z Record version: sha256:258b03ad6a67869eada7096114b7acbba85dd5a1c2724a9f64bb9d1784d0205d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)At each reporting date, an entity shall reassess whether environmental credits shall continue to be recognized as assets in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1). If an entity determines that it is no longer [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that an environmental credit will be used to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."), transferred in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, or used in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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."), the entity shall derecognize the environmental credit through earnings. ##### [818-20-40-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:22.130Z to 2026-09-10T01:42:22.130Z Record version: sha256:3a6505eeea9fda51c008696c271e03307a711c3af811c16e9da3c06ce0f2607e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)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. Source downloaded (UTC): 2026-09-10T01:42:25.246Z to 2026-09-10T01:42:25.246Z Record version: sha256:5bfabd9335a0580199f6b63524554811a68504059075dc2ed60d19b6ad8854b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/818/20/#45-other-presentation-matters) SEC content: no #### Balance Sheet ##### [818-20-45-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-45-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:25.246Z to 2026-09-10T01:42:25.246Z Record version: sha256:af94d5749790712079c516658a0064d9d285e0184a71c28dd7dbbeb3105bd063 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity that presents a classified balance sheet shall classify [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") reasonably expected to be transferred in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, used in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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."), or remitted to a regulator within one year (or the [operating cycle](https://asc.understandingaccounting.org/glossary/o/#operating-cycle "The average time intervening between the acquisition of materials or services and the final cash realization constitutes an operating cycle.") of the business, if longer) as current assets. All other environmental credits shall be classified as noncurrent assets. ##### [818-20-45-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-45-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:25.246Z to 2026-09-10T01:42:25.246Z Record version: sha256:06e5b8c38c5266d1681fd99d5365a90f0abac7172fa50ba7d863fabad9d5d9e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall present [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") separately from any related [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") liabilities recognized in accordance with Subtopic 818-30 on its balance sheet. Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:ca1e0068820a1de92f49f16357f7e066f68d3a41fb40576d23128957267c0b1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/818/20/#50-disclosure) SEC content: no ##### [818-20-50-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:e7beb73dad9e353edffc2426ed8652e70f1c4a21b366fb9644ab61072cddd76e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose the types of [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") owned by the entity and all of the following: 1. a How the entity obtained the environmental credits (acquired, granted, internally generated, or received in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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.")) 2. b How the entity intends to use the environmental credits (to settle [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."), to transfer in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, to use in a nonreciprocal transfer, or to meet voluntary environmental initiatives) 3. c The accounting policies used to account for the environmental credits in accordance with Topic 235 on notes to financial statements (for example, whether the environmental credits are subsequently measured using the average cost; first-in, first-out; or specific identification costing methods) 4. d Significant estimates and judgments used in applying the guidance. ##### [818-20-50-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:908d9636e460e2ffffa0308931ba0ce4cbcead312400421158133431756b173a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose, if not separately presented on the entity’s balance sheet, the current and noncurrent assets portion of both of the following: 1. a [Compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") 2. b [Noncompliance environmental credits](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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."). An entity also shall disclose the line item or items on the balance sheet that include the current asset and noncurrent assets portion of the amounts in (a) and (b). ##### [818-20-50-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:c75a0527558f9d2a91bab424771402a50534d78864201dba7ec3f0f40123c609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose all of the following: 1. a Total expense recognized for environmental credits not initially recognized as an asset in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) or subsequently derecognized in accordance with paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2). 2. b Total impairment expense recognized during the reporting period, the nature of the environmental credits that were impaired, and a description of the facts and circumstances giving rise to the impairment. 3. c The line item or items in the income statement that include the amounts in (a) and (b). See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [818-20-50-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:24ad6af7f818138f5766e28e03a3f0cf24de4837b60315b8a6d0a5a07ac1875b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, if as a result of applying the guidance in paragraphs [818-20-35-3 through 35-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-3) and paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2) an entity changes its use or intended use of its environmental credits, it shall disclose the nature of that change as of the date that it occurs and the related effect on earnings on that date, if any. ##### [818-20-50-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:277294329a5f3416d0cda9e3ca1c99208dda828eb6acf624a59147e664e46906 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall apply the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") disclosure requirements in Topic 820 for any fair value measurements made in accordance with this Subtopic. ##### [818-20-50-6](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:28.544Z to 2026-09-10T01:42:28.544Z Record version: sha256:532b91d227b35170aca2c679b96ac867e9f01397a88814bd8d91a13cdecf1a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraph [818-20-55-14](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-14) for an illustration of the quantitative disclosures required by this Subtopic. Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:44908961c9820432ed30af1dee5ef9dbdef0b043bf28f26a55814e10df029187 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/818/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [818-20-55-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:af92dba7fd4ad04f03483d7da91b336df2fe67478afe9aa7d4ca21d79490d044 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The following flowchart illustrates the accounting requirements for [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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."). The flowchart is a supplement to the guidance in this Subtopic, and it should not be interpreted to change any requirements of this Topic or be considered a substitute for those requirements. ![](https://asc.understandingaccounting.org/asc-img/GUID-0C65DE53-5368-443F-9DF3-E479655BD2EE-low.gif) At the date the credit is obtained Is it probable that the environmental credit (EC) will be used to settle an environmental credit obligation (ECO), transferred in an exchange transaction, or used in a nonreciprocal transfer (paragraph 818-20-25-1)? "No " "Recognize the cost of the EC as an expense as incurred (paragraph 818-20-25-1)." Yes Recognize an asset, classify, and measure as a compliance environmental credit or noncompliance environmental credit in accordance with paragraphs 818-20-25-2 and 818-20-30-1 through 30-3. At each reporting date For all ECs recognized as assets, is it still probable that the EC will be used to settle an ECO, transferred in an exchange transaction, or used in a nonreciprocal transfer (paragraph 818-20-35-1)? "No " "Derecognize the carrying amount of the EC through earnings (paragraph 818-20-40-2)." Yes Is it probable that the EC will be used to settle an ECO (paragraph 818-20-35-3)? Yes No "EC is classified as a compliance environmental credit and is not remeasured (no impairment testing)1,2 (paragraph 818-20-35-3)." "EC is classified as a noncompliance environmental credit and is tested for impairment1,2 (paragraph 818-20-35-4)." "1 If the classification of the EC changes from a previously determined classification, the EC is tested for impairment before it is reclassified (paragraph 818-20-35-5). 2 The flowchart assumes an entity has not made an accounting policy election to remeasure noncompliance environmental credits at fair value at each reporting period (paragraph 818-20-35-7)." ##### [818-20-55-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:d933e16c7676b9b975a3aca8b1f852d7874614a5310f803b17309dbda2352fe4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) requires that an entity recognize an environmental credit as an asset if it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that the environmental credit will be used to settle an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."), transferred in an [exchange](https://asc.understandingaccounting.org/glossary/e/#exchange "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.") transaction, or used in a [nonreciprocal transfer](https://asc.understandingaccounting.org/glossary/n/#nonreciprocal-transfer "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."). That assessment of probability is a collective assessment whereby the evaluation is made on the probability of any of those events occurring. For example, an entity purchases an environmental credit that it will use to either settle an environmental credit obligation or transfer in an exchange transaction. The entity determines that there is a 50 percent likelihood that the environmental credit will be used to settle an environmental credit obligation and a 50 percent likelihood that the environmental credit will be transferred in an exchange transaction. Therefore, an asset would be recognized because collectively the likelihood of those outcomes occurring is probable. ##### [818-20-55-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:9e6dbe92fd1ed0b11b55c6557f46e8a052dcc81bbb5fc1b5833c81605d7baf67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity does not need to have recognized an environmental credit obligation liability in accordance with Subtopic 818-30 to determine that it is probable that the entity will use an environmental credit to settle an environmental credit obligation because the liability may be recognized in a future period. In most instances, an entity will be able to readily determine whether it is probable that an environmental credit will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer. The following factors may be helpful in determining whether it is probable that an environmental credit will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer: 1. a The entity’s purpose for acquiring the environmental credit 2. b The quantity of environmental credits the entity owns compared with existing and expected environmental credit obligations 3. c Expected events and activities that may change the entity’s need for [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") in future periods 4. d The entity’s past uses of environmental credits 5. e Whether the entity would be committed to transfer in an exchange transaction any environmental credits in excess of those needed to satisfy an environmental credit obligation 6. f An entity’s internal emission reduction initiatives. ##### [818-20-55-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:ee35936865e5fb752c4b30251534624c7f629347cd0a4875e5cca339c24aecd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)In accordance with paragraph [818-20-25-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-5), an entity is not required to apply the recognition requirements in paragraphs [818-20-25-1 through 25-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) at the individual environmental credit level. For example, if an entity acquires 1,000 Class A renewable energy certificates, it evaluates whether it is probable that the renewable energy certificates will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer. The entity determines that it is probable that it will use 900 of those renewable energy certificates to settle an environmental credit obligation and that it is not probable that it will use the remaining 100 renewable energy certificates to settle an environmental credit obligation, transfer the renewable energy certificates in an exchange transaction, or use the renewable energy certificates in a nonreciprocal transfer. Therefore, the entity recognizes 900 Class A renewable energy certificates as environmental credit assets, and the remaining 100 Class A renewable energy certificates are expensed as incurred. ##### [818-20-55-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:7127a776b8551d025c775f8a55d6711a7faaf1e05be74bf06fa0c4e67aec8708 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1) requires that an entity initially measure an internally generated environmental credit or an environmental credit received through a grant from a regulator or its designee(s) at the transaction costs incurred, if any. Transaction costs include costs such as those that are necessary to validate, register, or authenticate an environmental credit so that the environmental credit may be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer. If an entity does not incur transaction costs, the initial measurement of those environmental credits should be zero. That initial measurement should not affect whether an asset is recognized in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) or whether the environmental credit is classified as a compliance environmental credit or a [noncompliance environmental credit](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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.") in accordance with paragraph [818-20-25-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-2). For example, a renewable energy certificate granted to an entity by a regulator that is determined to be probable of being used to settle an environmental credit obligation when received would be recognized as an asset and classified as a compliance environmental credit at initial recognition. That compliance environmental credit would be measured at zero if the entity does not incur transaction costs. Additionally, when that environmental credit is used to measure the funded portion of an environmental credit obligation liability, the liability also would be measured at zero. ##### [818-20-55-6](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:2fdc9670fcf8d1abdd9b18cf3552c305b5a886b9fa44af437599d859a22ae1ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Paragraph [818-20-30-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-2) requires an entity that obtains an environmental credit in a transaction initially measured in accordance with another Topic to follow the initial measurement requirements of that other Topic. For example: 1. a A renewable energy certificate received as consideration in a [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") that is within the scope of Topic 606 on revenue from contracts with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "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.") should be initially measured in accordance with paragraphs [606-10-32-21 through 32-22](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-21) . 2. b A carbon offset or renewable energy certificate received in a nonreciprocal transfer from an investee in a transaction that is within the scope of Topic 845 on nonmonetary transactions should be initially measured in accordance with that Topic. 3. c An environmental credit received in a nonreciprocal transfer between entities under common control should initially be measured in accordance with paragraphs [805-50-30-5 through 30-6](https://asc.understandingaccounting.org/asc/805/50/#805-50-30-5) . ##### [818-20-55-7](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-7) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:411cd486c5b9a014e7d4b742cd6f51840856bbd8da585b14b7309533fa95f647 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Paragraphs [818-20-35-7 through 35-10](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-7) permit an entity, as an accounting policy election, to subsequently measure a class of eligible noncompliance environmental credits at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") at each reporting date, with changes recognized in earnings. An entity should determine what constitutes a class based on its facts and circumstances. Eligible noncompliance environmental credits are those obtained in an exchange transaction, received in a nonreciprocal transfer that is not a grant from a regulator or its designee(s), or acquired in a [business combination](https://asc.understandingaccounting.org/glossary/b/#business-combination "A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity."). Environmental credits generated by the entity or received through a grant from a regulator (or its designee(s)) are ineligible for fair value measurement. For example, an oil refinery acquires 100 renewable identification numbers in an exchange transaction and is granted 20 similar renewable identification numbers from a regulator. The oil refinery determines that it is not probable that it will use the environmental credits to settle an environmental credit obligation because the entity intends to transfer in an exchange transaction all 120 of those noncompliance environmental credits. The 100 acquired renewable identification numbers are eligible for fair value measurement, and the 20 granted renewable identification numbers are not. ##### [818-20-55-8](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-8) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:e5b3e692fd8bfa91801f439d1831649054d8b764c2a318101367547e9e6500af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Notwithstanding the requirements of paragraphs [818-20-35-4 through 35-5](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-4) , an environmental credit subsequently measured at fair value in accordance with an entity’s accounting policy election should continue to be measured at fair value at each reporting date until the environmental credit is derecognized. For example, assume that an entity elects an accounting policy to subsequently measure a class of 600 eligible noncompliance renewable identification numbers at fair value at each reporting date. If the entity subsequently determines that it is probable that a portion (or all) of those 600 noncompliance renewable identification numbers will be used to settle environmental credit obligations, those renewable identification numbers would be reclassified as compliance environmental credits and would continue to be measured at fair value at each reporting date until derecognized. Therefore, measuring those compliance environmental credits at fair value would affect the measurement of the related funded portion of an entity’s environmental credit obligation liability measured in accordance with paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2). #### Illustrations ##### [818-20-55-9](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:32205601be46f6889af6a656df7f721773f642c4ab4deb01128986c194b91b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Examples 1 through 4 illustrate the application of the recognition and measurement requirements of this Subtopic. ##### [818-20-55-10](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:93dd3d1346f252dd8e6270591c82486ead7223c99506ef9e29084f881a0a4dc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An industrial manufacturing entity is subject to a cap-and-trade regulatory compliance program that mandates the remittance of emissions allowances to a regulator by March 31, 20X5, based on the amount of the entity’s emissions for a compliance year ending on December 31, 20X4. On January 1, 20X4, the entity purchases 10,000 emissions allowances at a regulator-sponsored auction for $1,000,000 ($100 per allowance) and pays $25,000 in auction fees. At initial recognition, the entity determines that it is probable that it will use those emissions allowances to settle its 20X4 cap-and-trade environmental credit obligation because it estimates that its emissions during 20X4 will require the remittance of 15,000 emissions allowances. The entity classifies the 10,000 emissions allowances as compliance environmental credits, initially measured at $1,025,000, in accordance with paragraph [818-20-30-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-3). Those emissions allowances are not remeasured if they continue to be classified, at each reporting date, as compliance environmental credits. ##### [818-20-55-11](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-11) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:35587f82083b6c38bb0960e7367acca1b890f61c63ab894fee31d95e9e728b5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)A cloud-based software developer publicly announces its voluntary initiative to be carbon neutral for the fiscal year ending December 31, 20X4. The carbon neutral initiative of the cloud-based software developer does not represent an environmental credit obligation because it does not result from a regulatory compliance obligation under existing or enacted laws, statutes, or ordinances. Specifically, this voluntary initiative does not establish an environmental credit obligation. The entity purchases 1,000 carbon offsets for $50,000 on March 1, 20X4, to meet its voluntary initiative. Because it is not probable that the entity will use the acquired carbon offsets to settle an environmental credit obligation, transfer those carbon offsets in an exchange transaction, or use those carbon offsets in a nonreciprocal transfer, the entity recognizes the $50,000 as an expense as incurred on March 1, 20X4, in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1). ##### [818-20-55-12](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-12) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:f4ad4a5a0a3d2bbf6844472bc31226e7bf5a6fde0af9eeac34acc972cb12de23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity that owns a tree farm uses a nationally accredited third-party registry to certify the tree farm and issue carbon offsets. During January 20X4, the entity’s tree farm activities resulted in 30,000 carbon offsets issued to the entity by the registry. The entity pays $1 per carbon offset as an administrative fee to the registry. The entity determines that it is not probable that it will use the carbon offsets to settle an environmental credit obligation because it intends to sell all of the carbon offsets created as a result of its tree farm activities. The entity recognizes the carbon offsets as assets and classifies them as noncompliance environmental credits. Those noncompliance environmental credits are initially measured at $30,000, the amount of the transaction costs, in accordance with paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1). In accordance with paragraph [818-20-35-9](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-9), an entity’s internally generated environmental credits are not eligible for the fair value measurement accounting policy election. ##### [818-20-55-13](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-13) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:566847bfd9e7cddbf0f5785f3a8bd60355e78c14b8fd9bc2cc31d42fbae3ba25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)A U.S. oil refinery is subject to a regulatory compliance program represented to control fuel emissions. The program requires fuel produced by the entity to include a minimum volume of fuel generated from renewable sources. The entity refines crude oil and conventional biofuel (renewable). During October 20X4, the entity refines 100,000 gallons of conventional biofuel, which results in 100,000 renewable identification numbers granted to the entity by the regulator in accordance with the program. The entity incurred no transaction costs to obtain the renewable identification numbers. The entity determines that it is probable that the renewable identification numbers will be used to settle an environmental credit obligation, transferred in an exchange transaction, or used in a nonreciprocal transfer and recognizes an asset that is initially measured at zero, in accordance with paragraph [818-20-30-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-30-1). Environmental credits received through a grant by a regulator or its designee(s) are not eligible for the fair value measurement accounting policy election in accordance with paragraph [818-20-35-9](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-9). ##### [818-20-55-14](https://asc.understandingaccounting.org/asc/818/20/#818-20-55-14) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:30.771Z to 2026-09-10T01:42:30.771Z Record version: sha256:0abbf20ce3c6e5c52f3f7c3a4e1d3f31729a9fc678edc03fa3ee94168a28c6a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The following is an illustration of the quantitative disclosures required by paragraphs [818-20-50-2 through 50-4](https://asc.understandingaccounting.org/asc/818/20/#818-20-50-2) for annual reporting periods. The format in the illustration is not a requirement, and the information should be formatted in the most understandable manner for an entity’s specific circumstances. This illustration does not illustrate comparative period disclosures. ![](https://asc.understandingaccounting.org/asc-img/GUID-7C921BE8-2DB2-4E2A-BCBC-04E7F9CE514D-low.gif) As of December 31, 20X4 Environmental Credit Carrying Amount Classification Current portion $5,100 Compliance Current portion 500 Noncompliance Noncurrent portion 3,800 Compliance Noncurrent portion - Noncompliance Total $9,400 Environmental Credit Expense Information For the Year Ended December 31, 20X4 Expense for voluntary environmental credit costs(a) $118 Impairment expense(b) $15 (a) Expense for voluntary environmental credit costs is included in other expenses in the income statement. (b) Impairment expense is recorded because of a decline in the fair market value of Project A carbon offsets. Impairment expense is included in cost of goods sold in the income statement. Change in Use of Environmental Credit Information For the Year Ended December 31, 20X4 Expense for voluntary environmental credit costs(a) $100 (a) Certain compliance environmental credits were expensed because it was no longer probable that the credits would be used to settle an ECO, transferred in an exchange transaction, or used in a nonreciprocal transfer. Source downloaded (UTC): 2026-09-10T01:42:35.777Z to 2026-09-10T01:43:08.971Z Record version: sha256:82f948f9e1ec8dc94ebd95e208b90ff5a28f2d0883a1a83d0a069d6be0aec978 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30: Environmental Credits and Environmental Credit Obligations — Environmental Credit Obligations ### Machine-generated study aids ```json { "summary": "ASC 818-30 governs when and how an entity recognizes, measures, presents, and discloses an environmental credit obligation — a liability to remit environmental credits (e.g., emissions allowances, renewable energy certificates) under a regulatory compliance program. A liability is recognized when events on or before the reporting date would require remitting credits assuming the reporting date were the end of the compliance period (818-30-25-1). The liability is split into a funded portion, measured at the carrying amount of compliance environmental credits on hand under Subtopic 818-20 costing methods (818-30-30-2), and an unfunded portion, measured at fair value of the needed credits unless the entity intends to settle in cash or with credits from an unconditional commitment or right (818-30-30-3).", "key_points": [ "Recognize a liability when events occurring on or before the reporting date result in an environmental credit obligation, determined as if the reporting date were the end of the regulatory compliance period, even if the compliance period ends later (818-30-25-1).", "Costs of the obligation are recognized in earnings or, if appropriate, capitalized as part of another asset under another Topic (818-30-25-1; presentation of changes and derecognition gains/losses must be consistent, 818-30-45-3 through 45-4).", "Apply Subtopic 818-20's recognition and measurement to the credits first; the funded portion is measured using the carrying amount of compliance environmental credits expected to be derecognized, using the same costing method (FIFO, average cost, etc.) applied under 818-20-35-2 (818-30-30-1 through 30-2).", "Noncompliance credits, credits never recognized as assets (818-20-25-1), and previously derecognized credits (818-20-40-2) are excluded from the funded portion, and only credits held at the reporting date count (818-30-30-2; 818-30-55-5).", "The unfunded portion is measured at the fair value of credits needed at the reporting date, unless the entity intends to settle in cash (then the program's cash settlement amount) or with credits from an existing unconditional purchase commitment or unconditional right (then the estimated cost basis, which may differ from the contract price) (818-30-30-3).", "Expected future activities that could increase, reduce, or eliminate the obligation may not be considered in measurement (818-30-30-4; 818-30-55-16); a right is not unconditional if contingent on future performance such as continuing to operate in the jurisdiction (818-30-55-7).", "Present obligation liabilities separately from compliance environmental credit assets, classified current/noncurrent (818-30-45-1 through 45-2); derecognize under Subtopic 405-20 (818-30-40-1); annual disclosures include program activities and settlement terms, unfunded measurement approach, funded/unfunded current and noncurrent amounts, total expense and income statement line, and capitalized amounts (818-30-50-1 through 50-4)." ], "categories": [ "Recognition", "Initial measurement", "Subsequent measurement", "Disclosure" ], "audience_level": "intermediate", "student_note": "The signature rule is the \"as if the reporting date were the end of the compliance period\" test: you measure the obligation on facts existing now and ignore forecast emissions or future fuel-efficient sales that might wipe it out. A common error is netting the credit asset against the obligation or measuring the whole liability at fair value — the funded portion carries the credits' historical carrying amount, and only the shortfall is fair valued (or measured at the cash settlement amount or committed cost basis).", "related_topics": [ "818-10", "818-20", "405-20", "805-50", "820", "220-40" ], "key_concepts": [ "environmental credit obligation", "funded portion", "unfunded portion", "compliance environmental credits", "regulatory compliance program", "unconditional purchase commitment", "cash settlement mechanism", "reporting date as end of compliance period assumption" ] } ``` Source downloaded (UTC): 2026-09-10T01:42:35.777Z to 2026-09-10T01:42:35.777Z Record version: sha256:cd3be17c7e70943496bcf4005129224d5a9769448610874df0f3a11b8680ab71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/818/30/#00-status) SEC content: no ##### [818-30-00-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:42:35.777Z to 2026-09-10T01:42:35.777Z Record version: sha256:6cb99c8ec8fb537887ccd1f6863a70ac7bd48721ffb49eff0909a6b7a3f6fc75 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
Compliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Environmental Credit ObligationAddedAccounting Standards Update No. 2026-0205/19/2026
ExchangeAddedAccounting Standards Update No. 2026-0205/19/2026
Fair Value (2nd def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Financial AssetAddedAccounting Standards Update No. 2026-0205/19/2026
Income TaxesAddedAccounting Standards Update No. 2026-0205/19/2026
Market ParticipantsAddedAccounting Standards Update No. 2026-0205/19/2026
Noncompliance Environmental CreditAddedAccounting Standards Update No. 2026-0205/19/2026
Nonreciprocal Transfer (1st def.)AddedAccounting Standards Update No. 2026-0205/19/2026
Operating CycleAddedAccounting Standards Update No. 2026-0205/19/2026
Orderly TransactionAddedAccounting Standards Update No. 2026-0205/19/2026
ProbableAddedAccounting Standards Update No. 2026-0205/19/2026
Related PartiesAddedAccounting Standards Update No. 2026-0205/19/2026
818-30-05-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-15-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-25-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-25-2AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-30-1 through 30-5
AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-35-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-40-1AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-45-1 through 45-4
AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-50-1 through 50-6
AddedAccounting Standards Update No. 2026-0205/19/2026
818-30-55-1 through 55-21
AddedAccounting Standards Update No. 2026-0205/19/2026
Source downloaded (UTC): 2026-09-10T01:42:38.699Z to 2026-09-10T01:42:38.699Z Record version: sha256:7580a7eea3c929ba840342a032a37fef7423f41870f358960e808507b03e2e3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/818/30/#05-overview-and-background) SEC content: no ##### [818-30-05-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-05-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:38.699Z to 2026-09-10T01:42:38.699Z Record version: sha256:f6d2897813ce0e5be2552ff1583b44a0686dcb7f6565f34bb72c9e68cac601e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)This Subtopic addresses the accounting for an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). Paragraph [818-30-55-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-1) provides a flowchart of the recognition and measurement requirements of this Subtopic. Source downloaded (UTC): 2026-09-10T01:42:42.261Z to 2026-09-10T01:42:42.261Z Record version: sha256:2b29cb19da4eca922565e4d613b4c2a29f09c1a55b6950c1fa35f69aff5e40b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/818/30/#15-scope-and-scope-exceptions) SEC content: no ##### [818-30-15-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-15-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:42.261Z to 2026-09-10T01:42:42.261Z Record version: sha256:6437ff740c4a3eb1d4b0418dcf6f062f8a84f100ee17b9d71bc0380fc0ae19c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)This Subtopic follows the same Scope and Scope Exceptions as the Overall Subtopic. Source downloaded (UTC): 2026-09-10T01:42:47.889Z to 2026-09-10T01:42:47.889Z Record version: sha256:d7bf96a341fbd691bff0b46f78e4924bad3bec6888378828f79517ce4be418c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/818/30/#25-recognition) SEC content: no ##### [818-30-25-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-25-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:47.889Z to 2026-09-10T01:42:47.889Z Record version: sha256:7975d40a40c472282f1119ef16085f5eb845a720d913653a469da8455917f23e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall recognize a liability when events that occur on or before a reporting date result in an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). When evaluating whether a liability should be recognized, an entity shall determine whether [environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") would be due assuming that the reporting date is the end of the regulatory compliance period, regardless of whether the regulatory compliance period ends after the reporting date. An entity shall recognize the costs associated with an environmental credit obligation liability either in earnings or, if appropriate, as part of another asset accounted for in accordance with another Topic. ##### [818-30-25-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-25-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:47.889Z to 2026-09-10T01:42:47.889Z Record version: sha256:62dfa7427871a5fe329262b0bc6fa46f3e309d9639289778433c1a5810d5f114 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraphs [818-30-55-2 through 55-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-2) for implementation guidance on the application of recognition requirements. Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:354e9239087e9928d5cd0d7850294dd132d20d9800963acd632a2cad73fbd4d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/818/30/#30-initial-measurement) SEC content: no ##### [818-30-30-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:659b91b981faf5929c48c556fbfd99b58c213887b86821fc532bddecc0c253b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall apply the recognition and measurement requirements of Subtopic 818-20 before applying the measurement requirements of this Subtopic on [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). An environmental credit obligation liability may have a funded portion and an unfunded portion to be measured in accordance with paragraphs [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) and [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3), respectively. ##### [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:3903381e026e4abe6b69740ea2d3d8655d082320fc707509f38b5d04dc46c420 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The funded portion of an environmental credit obligation liability is the portion for which an entity has associated [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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."). An entity shall measure the funded portion using the carrying amount of the compliance environmental credits expected to be derecognized upon settlement of the liability using costing methods consistent with those applied when subsequently measuring its compliance environmental credits in accordance with Subtopic 818-20. When measuring the funded portion of an environmental credit obligation liability, an entity shall not consider any of the following: 1. a [Noncompliance environmental credits](https://asc.understandingaccounting.org/glossary/n/#noncompliance-environmental-credit "(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.") 2. b [Environmental credits](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") that were never recognized as assets in accordance with paragraph [818-20-25-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-25-1) 3. c Environmental credits that were previously derecognized in accordance with paragraph [818-20-40-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-40-2). ##### [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:7eeaf858a358e485695936caada42af452eaf97eeb08c0eeaf3c77f49216b27a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)If an entity does not have sufficient compliance environmental credits to satisfy an environmental credit obligation liability at a reporting date, the unfunded portion of its environmental credit obligation liability shall be measured using the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the environmental credits necessary to settle that portion of the liability at the reporting date, unless an entity intends to settle (or partially settle) the unfunded portion by remitting any of the following: 1. a Cash. An entity that intends to settle the unfunded portion by remitting cash shall measure the unfunded portion using the cash settlement amount specified by the regulatory compliance program. 2. b Environmental credits that will be received before the settlement of the liability from either an existing unconditional purchase commitment for a fixed quantity of environmental credits at a fixed price or an unconditional right to receive a fixed quantity of environmental credits as part of a regulatory compliance program or contract for which environmental credits will be received as consideration. For purposes of applying the requirements in this paragraph, an unconditional right exists when an entity has satisfied all performance requirements of the regulatory compliance program or contract necessary to receive environmental credits as of the reporting date. An entity that intends to settle the unfunded portion using environmental credits from those unconditional commitments or rights shall measure the unfunded portion using the estimated cost basis of the environmental credits to be obtained (which may differ from the fixed price per the contract). ##### [818-30-30-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:8bd36cf9b2d61d7407937fa4fdbe82a996a1bb64dbc48b402b50dcfaad93bb0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall not consider expected future activities that may increase, reduce, or eliminate its environmental credit obligation liability when applying paragraph [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3). ##### [818-30-30-5](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:51.424Z to 2026-09-10T01:42:51.424Z Record version: sha256:35a778c6c204e12354e48b00c149834920b9edf5b6c8b9e4a92ec236357b826a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraphs [818-30-55-5 through 55-7](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-5) for implementation guidance on the application of initially measuring environmental credit obligation liabilities. Source downloaded (UTC): 2026-09-10T01:42:54.958Z to 2026-09-10T01:42:54.958Z Record version: sha256:dce19a0d22f9f6d35b70964846c0e18d76119f442b71dbc8637d442d86ab372c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/818/30/#35-subsequent-measurement) SEC content: no ##### [818-30-35-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-35-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:54.958Z to 2026-09-10T01:42:54.958Z Record version: sha256:f182bc26a52c2593d865b483540655187c3cc73fc15fe959817aaa75a59c4744 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)At each reporting date, an entity shall apply the initial measurement guidance in paragraphs [818-30-30-2 through 30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) and recognize any changes in an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") liability through earnings or as part of another asset accounted for in accordance with another Topic as required by paragraph [818-30-25-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-25-1). Source downloaded (UTC): 2026-09-10T01:42:58.763Z to 2026-09-10T01:42:58.763Z Record version: sha256:fb841651f3bb8aaba00ba50e28565c825e5255d43e3c10dbb03edd2724fc36f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/818/30/#40-derecognition) SEC content: no ##### [818-30-40-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-40-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:42:58.763Z to 2026-09-10T01:42:58.763Z Record version: sha256:8bc608fcac74d21f95b7d757714f26e3c1bbcd80912f6ac9e6928816aecaf789 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall derecognize an [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") liability in accordance with Subtopic 405-20 on extinguishments of liabilities. Source downloaded (UTC): 2026-09-10T01:43:00.521Z to 2026-09-10T01:43:00.521Z Record version: sha256:2d2cee3782891ff5b0e78d1f76b961ad73990ab5356491fe4ad695138b52f818 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/818/30/#45-other-presentation-matters) SEC content: no #### Balance Sheet ##### [818-30-45-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-45-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:00.521Z to 2026-09-10T01:43:00.521Z Record version: sha256:a592ed95debddb6888dea6a09cf4f50ae8c6c6b754531bd8076ed409f11eb8e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall present its [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") liabilities separate from its [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") recognized as assets in accordance with Subtopic 818-20 on its balance sheet. ##### [818-30-45-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-45-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:00.521Z to 2026-09-10T01:43:00.521Z Record version: sha256:8c2dda2d547dda6e27982484470542e198ff154fb078a7833152c007b787400d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity that presents a classified balance sheet shall classify environmental credit obligation liabilities reasonably expected to be settled within one year (or the [operating cycle](https://asc.understandingaccounting.org/glossary/o/#operating-cycle "The average time intervening between the acquisition of materials or services and the final cash realization constitutes an operating cycle.") of the business used for applying paragraph [818-20-45-1](https://asc.understandingaccounting.org/asc/818/20/#818-20-45-1), if longer) as a current liability. All other environmental credit obligation liabilities shall be classified as noncurrent liabilities. #### Income Statement ##### [818-30-45-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-45-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:00.521Z to 2026-09-10T01:43:00.521Z Record version: sha256:492bdeb722655111a075bf5756cbe52b516cff18baa50f07669e7fe48255da34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall present any changes in an environmental credit obligation liability in the income statement in a manner consistent with the recognition and measurement of that liability. ##### [818-30-45-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-45-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:00.521Z to 2026-09-10T01:43:00.521Z Record version: sha256:1b7042482fe795af5bcdb88d75878acb7d1010881c1b5f6047e9bdc4a4ccc1da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall present any gain or loss recognized upon derecognition of an environmental credit obligation liability in the income statement in a manner consistent with the recognition and measurement of that liability. Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:47afdc0a8c223b91b9b7f225fd1338e37869fdb8a6095c83e23ce677c426eec0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/818/30/#50-disclosure) SEC content: no ##### [818-30-50-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:1dc63d5e2123a8454fee5fd1d9d4d699ca77c749b5ff236a4f5e45343f40ee51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose all of the following about regulatory compliance programs that result in the entity’s [environmental credit obligation](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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.") liabilities: 1. a The activities or events that result in environmental credit obligation liabilities under those programs, including the nature and timing of settlement provisions 2. b The accounting policies used to account for the environmental credit obligations in accordance with Topic 235 on notes to financial statements 3. c How the unfunded portion of an environmental credit obligation liability is measured in accordance with paragraph [818-30-30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) 4. d Significant estimates and judgments used in applying the guidance. ##### [818-30-50-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:d9a4c8b34a731b219c453d16ee727fe5607db218a03ad1111ebfc94fae6ecb09 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, if not separately presented on an entity’s balance sheet, an entity shall disclose the current and noncurrent portions of both of the following: 1. a The funded portion of an environmental credit obligation liability 2. b The unfunded portion of an environmental credit obligation liability. An entity also shall disclose the line item or items on the balance sheet that include the current and noncurrent portions of amounts in (a) and (b). ##### [818-30-50-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:97a95a433c07b74e8a4374246c09a46d8debb4e20701b737340db8da80f6f51b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose the total expense recognized for environmental credit obligation liabilities during the reporting period and the line item in the income statement that includes that amount. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ##### [818-30-50-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:aa7382e71e832aa486f0459e2573d454a278e2850cda1d299fda1db1f92548a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For annual reporting periods, an entity shall disclose both of the following: 1. a The total costs associated with environmental credit obligation liabilities that are capitalized in the carrying amount of another asset during the reporting period in accordance with another Topic 2. b A description of the other asset. ##### [818-30-50-5](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:ebe643c65b96fbcec73c7634cc6dce741a8899acdf6a09ebb2ed20ccbd0d03e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity shall apply the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") disclosure requirements in Topic 820 for any fair value measurements made in accordance with this Subtopic. ##### [818-30-50-6](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:04.563Z to 2026-09-10T01:43:04.563Z Record version: sha256:251aee47929fc7bfbf1116f93573353340d7a2452642072d866e14014077b7bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)See paragraph [818-30-55-21](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-21) for an illustration of the quantitative disclosures required by this Subtopic. Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:8cc605d3d88a2d103c4d1e20088c6daa62c5796ddb6895c597a62e9719db09e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 818-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/818/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [818-30-55-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-1) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:2ee1ca739929dfe06b286e90e761ade088f43345bb41436f63cf7a134a02062a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The following flowchart illustrates the accounting requirements of this Subtopic for [environmental credit obligations](https://asc.understandingaccounting.org/glossary/e/#environmental-credit-obligation "(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."). The flowchart is a supplement to the guidance in this Subtopic. It should not be interpreted to change any requirements of this Topic or be considered a substitute for those requirements. ![](https://asc.understandingaccounting.org/asc-img/GUID-C7A1B943-AF39-4A5E-AF2F-F0FF2AC37AF5-low.gif) Have events occurred on or before the reporting date that result in an environmental credit obligation (ECO) liability (paragraph 818-30-25-1)? "No" ECO measurement requirements are not applicable. Yes Recognize an ECO liability and measure the liability as follows: Funded Portion Unfunded Portion Measure the funded portion of the ECO liability using the carrying amount of compliance environmental credits at the reporting date (paragraph 818-30-30-2). "Measure the unfunded portion using the fair value of the environmental credits necessary to settle that portion at the reporting date (paragraph 818-30-30-3), unless:" The entity intends to settle the unfunded portion in cash. The entity intends to settle the unfunded portion using environmental credits from either (a) an existing unconditional purchase commitment (fixed quantity at a fixed price) or (b) an unconditional right to receive a fixed quantity of environmental credits as part of a regulatory compliance program or contract for which environmental credits will be received as consideration. Measure the unfunded portion using the cash settlement amount specified by the regulatory compliance program (paragraph 818-30-30-3(a)). Measure the unfunded portion using the estimated cost basis of the environmental credits to be obtained (paragraph 818-30-30-3(b)). ##### [818-30-55-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:81cd9924137ee9bc727a736fd7156c4e379f5a555569e3b8e14cdd25e12a4973 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)In some regulatory compliance programs, the qualifying events or activities that trigger an obligation to remit an [environmental credit](https://asc.understandingaccounting.org/glossary/e/#environmental-credit "(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.") (which is often emissions as they occur) are established and specified by the program. In those programs, an entity typically cannot reduce the quantity of environmental credits that it is obligated to remit to the regulator at a point in time through future performance. For those programs, an entity should recognize an environmental credit obligation liability upon the occurrence of each qualifying event or activity. For example, if a utility company is required to remit one renewable energy certificate for every one megawatt-hour of electricity delivered to customers, the entity would recognize an environmental credit obligation liability for the obligation to remit one renewable energy certificate upon the delivery of one megawatt-hour to a customer. ##### [818-30-55-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-3) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:c8962bf4ab615cb3bb794b724af6a653a64f6d145d6bdb5bfcd8e46781bc1dea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)In other regulatory compliance programs that result in environmental credit obligations, an entity is obligated to remit environmental credits to a regulator after it exceeds an established threshold of emissions. After exceeding the established threshold, each qualifying activity results in an incremental obligation to remit an environmental credit to the regulator at the settlement date specified by the program. For example, a regulatory compliance program obligates an entity to remit one emissions allowance for each metric ton of greenhouse gas emitted over 1,000 metric tons. An entity subject to that program should recognize an environmental credit obligation liability after its emissions exceed 1,000 metric tons. Because the entity is not obligated to remit an environmental credit until the threshold is exceeded, a liability should not be recognized before excess emissions occur. Therefore, when the entity emits above the 1,000 metric ton threshold, it should recognize an environmental credit obligation liability for each emissions allowance due thereafter. ##### [818-30-55-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-4) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:bd81d2ba4b7a27bbaa463817fbf5e2a6a22ff7b64f8a1b1e63bf960fb19a8ae2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Some regulatory compliance programs determine an entity’s environmental credit obligation by considering activities over a period of time. Under those programs, an entity’s future performance or actions may increase, reduce, or eliminate the need to remit environmental credits to a regulator at the settlement date. For those regulatory compliance programs, an entity should recognize an environmental credit obligation liability at a reporting date when activities or events occurring on or before that date obligate the entity to remit an environmental credit to the regulator assuming that the reporting date was the end of the compliance period. This assumption should be applied regardless of whether the regulatory compliance period ends after the reporting date. For example, consider an automotive manufacturer subject to a regulatory compliance program that requires that an entity remit environmental credits if the fuel efficiency of vehicles sold over a multiyear compliance period does not satisfy a benchmark threshold for that compliance period. Under those programs, an entity may sell vehicles during a reporting period that indicates that an environmental credit obligation liability exists at one reporting date that can be reduced or eliminated upon future sales of more fuel-efficient vehicles and before the compliance period ends. The entity should recognize an environmental credit obligation liability at the reporting date based on the facts and circumstances existing at that date. An entity should not forecast future activities or events that may increase, reduce, or eliminate the need to remit environmental credits to a regulator at the settlement date when determining whether it should recognize an environmental credit obligation liability. ##### [818-30-55-5](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-5) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:62fc6d162befe2bfeae1825e2bb334d0f29dce9cad0ae1989bff7cd4f81a02e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)When applying paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) for the measurement of the funded portion of an environmental credit obligation liability, an entity should consider only [compliance environmental credits](https://asc.understandingaccounting.org/glossary/c/#compliance-environmental-credit "(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.") recognized as assets at the reporting date, not those credits that will (or may) be obtained in future periods. ##### [818-30-55-6](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-6) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:9be9c609e1b1f2d30d72c953e9d0685fd79dd06acc226a1543c1d9d54ba92949 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)In accordance with paragraph [818-30-30-3(b)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3), if an entity intends to settle the unfunded portion of an environmental credit obligation liability using environmental credits to be obtained before the settlement date through an unconditional purchase commitment for a fixed quantity of environmental credits at a fixed price that exists at the reporting date, that liability should be measured using the estimated cost basis of the environmental credits to be obtained. For example, a contract specifying that an entity will purchase 10,000 renewable energy certificates each year for the next 5 years at a fixed price of $20,000 ($2 per renewable energy certificate) per year may be considered when measuring the unfunded portion. If the entity intends to settle the unfunded portion of an environmental credit obligation liability using environmental credits to be obtained under that commitment before the settlement date, that unfunded portion would be measured using a cost basis of $2 per renewable energy certificate. However, if those renewable energy certificates are obtained as part of a bundled arrangement (for example, a power purchase arrangement) that includes the related energy, the estimated cost basis of the environmental credits to be obtained may differ from the fixed price per the contract because the amount allocated to that renewable energy certificate in accordance with Subtopic 805-50 on asset acquisitions may be different from the fixed price per the contract. In that scenario, an entity would measure the environmental credit obligation liability using the estimated cost basis of the renewable energy certificates to be obtained based on the estimated amount to be allocated to the renewable energy certificates in accordance with Subtopic 805-50. ##### [818-30-55-7](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-7) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:5d5b928df504e59e50657574ed3c71ad8b98e64a993061ef2d480f98c6732a77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Also in accordance with paragraph [818-30-30-3(b)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3), if an entity has an unconditional right to receive a fixed quantity of environmental credits either from a regulator at a future date as part of a regulatory compliance program or as part of a contract for which the environmental credits are received as consideration, it should consider those environmental credits when measuring the unfunded portion of an environmental credit obligation liability if it intends to settle the obligation by remitting those credits. For example, if an entity is subject to a cap-and-trade program that specifies that the entity has an unconditional right on December 31, 20X4, to receive 1,000 emissions allowances on March 15, 20X5, the entity may consider those environmental credits to be received at a later date when measuring the unfunded portion if it intends to settle its environmental credit obligation by remitting those credits. That right would not be considered unconditional if the future grant is contingent on the entity’s future performance, including continuing to conduct business in the program’s jurisdiction after the reporting date. For example, if an entity subject to a cap-and-trade program specifying that an entity subject to the program as of December 31, 20X4, will receive 1,000 emissions allowances on March 15, 20X5, if the entity continues to operate in the program’s jurisdiction on that date, the entity should not consider those environmental credits when measuring the unfunded portion before March 15, 20X5. #### Illustrations ##### [818-30-55-8](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-8) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:09cefdd2b028f2cb5c3f4a665331be0d5cdee24fae1ceb1a93298a21335dcb06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Examples 1 through 3 illustrate the application of the environmental credit obligation liability recognition and measurement requirements in this Subtopic. ##### [818-30-55-9](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-9) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:7f68006bc2b083823ab8c95c4740b6bda1e9a5a109ec2c4b23e406a85bd768b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)A manufacturing entity is subject to a cap-and-trade program that obligates the entity to remit emissions allowances to a regulator at a future settlement date with the quantity due determined based on greenhouse gas emissions for a calendar year. On March 31, 20X4, the entity determines that its 20X4 emissions to date would obligate it to remit 10,000 emissions allowances assuming that the March 31, 20X4 reporting date represents the end of the program’s compliance period. On that date, the entity has 20,000 emissions allowances accounted for as compliance environmental credits with a carrying amount of $206,000. The entity subsequently measures its emissions allowances using the first-in, first-out costing method in accordance with paragraph [818-20-35-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-2). Those 20,000 emissions allowances comprise 8,000 acquired in March 20X3 for $96,000 ($12 per allowance Vintage Year 20X2), 7,000 acquired in August 20X3 for $70,000 ($10 per allowance Vintage Year 20X3), and 5,000 acquired in January 20X4 for $40,000 ($8 per allowance Vintage Year 20X4). For purposes of this Example, vintage year refers to the year that the emissions allowances were issued or sold at auctions by the regulator of the cap-and-trade program. ##### [818-30-55-10](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-10) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:1ce4039152db4d51220740e718f340a99b3325706d52864b44ef20a707541ef2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The entity first applies the asset reassessment requirements in paragraph [818-20-35-3](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-3) and determines that all 20,000 emissions allowances continue to be [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") of being used to settle environmental credit obligation liabilities. Therefore, those emissions allowances remain classified and accounted for as compliance environmental credits. In accordance with paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2), the entity measures the environmental credit obligation liability for the 10,000 emissions allowances using the carrying amount of compliance environmental credits recognized on March 31, 20X4. When assessing the carrying amount of the related compliance environmental credits, the entity considers the costing method applied in accordance with the requirements in paragraph [818-20-35-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-2) and uses that method to determine its best estimate of the carrying amount of compliance environmental credits. ##### [818-30-55-11](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-11) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:4ed4033ebe74689dc95b190bae8e2e8dec80547ce36807d9313c2dd044ac093c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Therefore, the carrying amount of the 10,000 credits expected to be used to satisfy the regulatory compliance program is $116,000 (the sum of the 8,000 Vintage Year 20X2 allowances at $12 per allowance plus 2,000 of the Vintage Year 20X3 allowances at $10 per allowance). The entity recognizes an environmental credit obligation liability on March 31, 20X4, for 10,000 emissions allowances measured at $116,000. ##### [818-30-55-12](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-12) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:c4a989de4d3a884d63e785484d3a726f9e4049033dcfe1f4b77a777b2538edf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Assume the same facts and circumstances as Case A except that the entity’s 20X4 emissions to date would obligate it to remit 14,000 emissions allowances. Additionally, assume that the entity subsequently measures the emissions allowances using an average cost method in accordance with paragraph [818-20-35-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-2). Vintage Years 20X2 through 20X4 emissions allowances are accepted methods of settlement for 20X4 cap-and-trade obligations, and the entity accounts for them as a single cost pool. ##### [818-30-55-13](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-13) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:879cffae84bfec2bf52c207bbcd7238b19a2b77d008953cbed18bb5687c7aca4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Regardless of the specific emissions allowances that the entity intends to transfer to the regulator, the entity will derecognize the environmental credits remitted at their average cost based on the entity’s previously elected accounting policy. Average cost is one of the three allowable costing methods that an entity can use for subsequently measuring similar environmental credits in accordance with paragraph [818-20-35-2](https://asc.understandingaccounting.org/asc/818/20/#818-20-35-2). On March 31, 20X4, the entity determines that the average cost is $10.30 per emissions allowance (the total cost of the emissions allowances of $206,000 divided by the total number of emissions allowances of 20,000). On that basis, the environmental credit obligation liability recognized for the 14,000 emissions allowances necessary to satisfy the liability at the reporting date is $144,200 in accordance with paragraph [818-30-30-2](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) (the average cost of $10.30 per emissions allowance multiplied by 14,000 emissions allowances necessary to satisfy the liability). ##### [818-30-55-14](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-14) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:fcf2a5c27e9fa09847f2cdc0ab0bc2eea031a9640e6f7b966abdd8ac6827e929 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An automotive manufacturer selling vehicles is subject to a regulatory compliance program represented to control greenhouse gas emissions by establishing minimum levels of average fuel economy standards for vehicles sold. The compliance period begins on January 1, 20X4, and ends on December 31, 20X7. The entity is obligated to remit 1 environmental credit per vehicle for each mile per gallon that the average fuel economy of all of its vehicles sold within a designated model year is less than 32 miles per gallon. The regulator grants the entity 1 environmental credit per vehicle for every mile per gallon that the average fuel economy of all vehicles sold exceeds 32 miles per gallon. The entity has not executed an unconditional purchase commitment to acquire environmental credits, and the regulatory compliance program does not permit an alternative cash settlement mechanism. The entity determines that it intends to settle the obligation by acquiring the necessary environmental credits from another automotive manufacturer. ##### [818-30-55-15](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-15) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:684bbb201cfb3b61e05ef16a26fbe961824bb4c1180fbcd93008c7a0cd345c73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)For the 3 months ending March 31, 20X4, the entity sold 100,000 20X4 model year vehicles with an average fuel economy of 30 miles per gallon. On that basis, the entity would be obligated to remit 200,000 environmental credits if the compliance period ended on March 31, 20X4. In accordance with paragraph [818-30-25-1](https://asc.understandingaccounting.org/asc/818/30/#818-30-25-1), the entity should recognize an environmental credit obligation liability on that date. The liability is initially measured in accordance with paragraphs [818-30-30-2 through 30-3](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-2) . On March 31, 20X4, the fair value of those environmental credits is $4 per credit. Therefore, the entity recognizes an unfunded environmental credit obligation liability of $800,000 on that date. ##### [818-30-55-16](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-16) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:c6889dc0806c81285ec11788882234b2a6fb9bf3656bef3e600c0cc2a6c6caa9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)When measuring its March 31, 20X4 environmental credit obligation liability, the entity should not consider any activities or events that may increase, reduce, or eliminate the number of environmental credits that would be required at the reporting date. For example, if the entity intends to manufacture and sell more fuel-efficient vehicle models that result in environmental credits being granted to the entity before the settlement date, it should not consider the receipt of those expected future environmental credits when measuring the existing environmental credit obligation liability. ##### [818-30-55-17](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-17) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:ff7f6084f695ed0f053d9fbbfd02526476047d65a1e4e32b38e7f5c25e929ced Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Assume the same facts and circumstances as in Case A except that the regulatory compliance program permits an alternative cash settlement mechanism that the entity intends to use because of a shortage of environmental credits associated with the program in the market. That alternative cash settlement mechanism allows the entity to settle its environmental credit obligation by paying $4.25 per environmental credit due to the regulator. In accordance with paragraph [818-30-30-3(a)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3) and because the entity intends to use the alternative settlement mechanism, the entity recognizes an environmental credit obligation liability of $850,000 on March 31, 20X4. ##### [818-30-55-18](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-18) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:c4ba28acced85290ffdb56a518577698c094d90bfc46c0165406acfc364bf5b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)Assume the same facts and circumstances as in Case A except that during 20X3 the entity executed an unconditional purchase commitment for 500,000 environmental credits at $3 per credit to be received before the settlement date. On March 31, 20X4, the entity intends to settle its environmental credit obligation liability using environmental credits to be obtained from that purchase commitment. In accordance with paragraph [818-30-30-3(b)](https://asc.understandingaccounting.org/asc/818/30/#818-30-30-3), the entity recognizes an environmental credit obligation liability of $600,000. ##### [818-30-55-19](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-19) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:07727df9ee3c6d74cf7eda95e23ed312ad4af86a0c67642b58c16ec6fd189163 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An e-commerce retailer is subject to an annual regulatory compliance program that obligates it to remit 1 environmental credit for each metric ton of emissions in excess of 1,000,000 metric tons. The regulatory compliance program ends on December 31, 20X4. As of June 30, 20X4, the entity’s year-to-date emissions are 750,000 metric tons. At that date, the entity expects to emit 750,000 additional metric tons by December 31, 20X4. On that basis, the entity estimates that by the end of the regulatory compliance program, it will be obligated to remit 500,000 environmental credits to the regulator for its excess emissions. On June 30, 20X4, the entity does not recognize an environmental credit obligation liability because it is not obligated to remit any environmental credits assuming that date was the end of the compliance period. An environmental credit obligation liability is recognized under this program only after emissions exceed 1,000,000 metric tons. ##### [818-30-55-20](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-20) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:c3f1560d96602b6c35689978aeb203782d799893075d4a77eda43799f952e4e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)An entity publicly states its voluntary initiative to reduce its net annual emissions by 50 percent by 20X0 by acquiring carbon offsets in addition to making infrastructure investments and process changes. Because the entity’s statement does not arise from a regulatory compliance obligation under existing or enacted laws, statutes, or ordinances, it is not an environmental credit obligation accounted for in accordance with this Subtopic. ##### [818-30-55-21](https://asc.understandingaccounting.org/asc/818/30/#818-30-55-21) Pending content: yes Source downloaded (UTC): 2026-09-10T01:43:07.088Z to 2026-09-10T01:43:07.088Z Record version: sha256:932d254f8fc7f6cf38556a2a9eca38b557ff83ace37886a7b3f76a5a8e0b173f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [818-10-65-1](https://asc.understandingaccounting.org/asc/818/10/#818-10-65-1)The following is an illustration of the quantitative disclosures required by paragraphs [818-30-50-2 through 50-4](https://asc.understandingaccounting.org/asc/818/30/#818-30-50-2) for annual reporting periods. The format in the illustration is not a requirement, and the information should be formatted in the most understandable manner for an entity’s specific circumstances. This illustration does not illustrate comparative period disclosures. ![](https://asc.understandingaccounting.org/asc-img/GUID-E947093F-2943-40D4-A99C-7BD92CDD069E-low.gif) "As of December 31, 20X4" Environmental Credit Obligation Liability Funded Obligation Unfunded Obligation Total Obligation Current liability " $5,100 " " $1,400 " " $6,500 " Noncurrent liability " 3,800 " - " 3,800 " Total " $8,900 " " $1,400 " " $10,300 " Environmental Credit Obligation Cost and Expense Information "For the Year Ended December 31, 20X4" Expense recognized for environmental credit obligations(a) " $9,370 " Costs capitalized as part of inventory that are associated with environmental credit obligations " $2,000 " (a) Expense recognized for environmental credit obligations is included in other expenses in the income statement.