# ASC 842-980-25: Leases — Regulated Operations — 25 Recognition

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/842/980/#25-recognition)

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## ASC 842-980-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/842/980/#25-recognition)

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#### Sale and Leaseback Transactions

##### [842-980-25-1](https://asc.understandingaccounting.org/asc/842/980/#842-980-25-1)

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Accounting for sale and leaseback transactions in accordance with the guidance in Subtopic 842-40 may result in a difference between the timing of income and expense recognition required by that Subtopic and the timing of income and expense recognition for rate-making purposes.

##### [842-980-25-2](https://asc.understandingaccounting.org/asc/842/980/#842-980-25-2)

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That difference shall be accounted for as follows:

1.  a
    
    If the difference in timing of income and expense recognition constitutes all or a part of a [phase-in plan](https://asc.understandingaccounting.org/glossary/p/#phase-in-plan "Any method of recognition of allowable costs in rates that meets all of the following criteria: The method was adopted by the regulator in connection with a major, newly completed plant of the regulated entity or of one of its suppliers or a major plant scheduled for completion in the near future. The method defers the rates intended to recover allowable costs beyond the period in which those allowable costs would be charged to expense under generally accepted accounting principles (GAAP) applicable to entities in general. The method defers the rates intended to recover allowable costs beyond the period in which those rates would have been ordered under the rate-making methods routinely used prior to 1982 by that regulator for similar allowable costs of that regulated entity."), it shall be accounted for in accordance with Subtopic 980-340.
    
2.  b
    
    Otherwise, the timing of income and expense recognition related to the sale and leaseback transaction shall be modified as necessary to conform to the Regulated Operations Topic. That modification required for a transaction that is accounted for as a financing is further described in the following paragraph and paragraphs
    
    [980-840-35-1 through 35-2](https://asc.understandingaccounting.org/asc/840/980/#840-980-35-1)
    
    .

##### [842-980-25-3](https://asc.understandingaccounting.org/asc/842/980/#842-980-25-3)

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The difference between the amount of income or expense recognized for a transaction that is not part of a phase-in plan and that is accounted for as a financing under Subtopic 842-40 and the amount of income or expense included in allowable cost for rate-making purposes shall be capitalized or accrued as a separate regulatory-created asset or liability, as appropriate, if that difference meets the criteria of the Regulated Operations Topic.