# ASC 980-20-35: Regulated Operations — Discontinuation of Rate-Regulated Accounting — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/980/20/#35-subsequent-measurement) 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): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:ee4f0f8bb1ab0e581e4b8fbf4b5ef0a32a6dc3ddcfea9cbc7d6b8fcad394f26a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 980-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/980/20/#35-subsequent-measurement) SEC content: no #### Discontinuation of Recognition Following Regulator Actions ##### [980-20-35-1](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:ce6c151ec6c4268e465dc9e676fe3b1f4baaab953702c1bd2cf754a1dda9c08f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that discontinues application of the Regulated Operations Topic shall no longer recognize the effects of actions of a regulator as assets or liabilities unless the right to receive payment or the obligation to pay exists as a result of past events or transactions and regardless of future transactions. #### Plant, Equipment, and Inventory ##### [980-20-35-2](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:9ab7cefb38cd6f6513d98b42bc9ef1146f916ee64afb397cf1be794574258a0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic requires that upon the discontinuation of rate-regulated accounting, the carrying amounts of the plant, equipment, and inventory measured and recorded pursuant to this Topic shall not be adjusted unless those assets are impaired. ##### [980-20-35-3](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:34ff059b50ea10d2ac6291105d98586957d457914d5a29ae43686322772d965c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The carrying amounts of plant, equipment, and inventory for entities applying this Topic differ from those for entities in general only because of the [allowance for funds used during construction](https://asc.understandingaccounting.org/glossary/a/#allowance-for-funds-used-during-construction "The cost of financing construction as financed partially by borrowings and partially by equity, capitalized as part of the cost of plant and equipment pursuant to requirements of the regulator."), intra-entity profit, and disallowances of costs of recently completed plants. If any other amounts that would not be includable in the carrying amounts of plant, equipment, or inventory by entities in general are included in or netted against the carrying amounts of plant, equipment, and inventory, those amounts shall be separated from the carrying amounts of plant, equipment, and inventory and accounted for as prescribed in this Subtopic. ##### [980-20-35-4](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:5ee80bc3984bcc884949663c461f870bcded476054c86bde43ab17e661cd09f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, postconstruction operating costs that were capitalized pursuant to paragraph [980-340-25-1](https://asc.understandingaccounting.org/asc/340/980/#340-980-25-1) represent the effects of actions of a regulator regardless of their classification in the financial statements and shall be accounted for as this Subtopic prescribes for the effects of actions of a regulator. ##### [980-20-35-5](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:264639160e98a09c3b78674c7ae7d42c6b350f0538ba1a23ff2b253651c91874 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another example of the effect of actions of a regulator that would require adjustment is the cumulative difference, if any, between recorded depreciation and depreciation computed using a generally accepted method of depreciation. #### Regulatory Assets and Liabilities Originating in a Separable Portion of the Entity ##### [980-20-35-6](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:d9d9dba725bab59bbed91370c7274158be1f32eed941f846b50266a5c9b5bc0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [regulatory assets and regulatory liabilities](https://asc.understandingaccounting.org/glossary/r/#regulatory-assets-and-regulatory-liabilities "Regulatory assets and regulatory liabilities are those assets and liabilities recognized pursuant to the provisions of paragraphs 980-340-25-1 and 980-405-25-1. These assets and liabilities are not recognized by entities in general.") that originate in a separable portion of an entity to which this Subtopic is applied shall be evaluated on the basis of where (that is, the portion of the business in which) the regulated cash flows to realize and settle them, respectively, will be derived. Regulated cash flows are from rates that are charged to customers and intended by regulators to be for the recovery of the specified regulatory assets and the settlement of regulatory liabilities. They are derived from a levy on rate-regulated goods or services provided by another separable portion of the entity that meets the criteria of paragraph [980-10-15-2](https://asc.understandingaccounting.org/asc/980/10/#980-10-15-2) for application of this Topic. ##### [980-20-35-7](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:ec72ce689aaa005bce9141bd7657a9986a573d7ef92d33bb96d26d4fe2ee99f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There is no elimination of the regulatory assets and regulatory liabilities that originate in the separable portion of the business to which this Subtopic is applied and for which the deregulatory legislation or rate order (whichever is necessary to effect change in the jurisdiction) specifies the collection of regulated cash flows until any of the following occur: 1. a They are recovered by (in the case of assets) or settled through (in the case of liabilities) collection of regulated cash flows. 2. b They are individually impaired (in the case of assets) or the regulator eliminates the obligation (in the case of liabilities) as specified by the provisions of this Topic. 3. c The separable portion of the business from which the regulated cash flows are derived no longer meets the criteria of paragraph [980-10-15-2](https://asc.understandingaccounting.org/asc/980/10/#980-10-15-2) for application of this Topic. ##### [980-20-35-8](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:055df79426d9ec8a85b26eae3064aeb802e3b71215184f82e35ce434ae6997dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The source of the cash flow approach adopted in paragraphs [980-20-35-6 through 35-9](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-6) shall be used for recoveries of all costs and settlements of all obligations (not just for regulatory assets and regulatory liabilities that are recorded at the date this Subtopic is applied) for which regulated cash flows are specifically provided in the deregulatory legislation or rate order (whichever is necessary to effect change in the jurisdiction). ##### [980-20-35-9](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:27:58.021Z to 2026-09-10T02:27:58.021Z Record version: sha256:d83d55d3c379a08ff15aec9e33e077765b2225a43fa445fcd7c827c341a0a000 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A cost or an obligation is recognized as a regulatory asset or a regulatory liability within the separable portion of the entity from which the regulated cash flows for its recovery or settlement, respectively, are derived once it meets both of the following conditions: 1. a Expensed or incurred after this Subtopic is applied to the portion of the business where it originated (such as the loss on the sale of an electricity generating plant or the loss on the buy-out of a purchased power contract that is recognized after this Subtopic is applied to the generation portion of the business) 2. b Specified for recovery or settlement in the deregulatory legislation or a rate order (whichever is necessary to effect change in the jurisdiction) and is recovered or settled in the same manner (that is, via regulated cash flows) as the regulatory assets and regulatory liabilities described in paragraphs [980-20-35-6 through 35-9](https://asc.understandingaccounting.org/asc/980/20/#980-20-35-6) . Those regulatory assets and regulatory liabilities shall be carried in this other separable portion of the business until they are collected or settled, until they are individually impaired (assets) or eliminated (liabilities), or until that separable portion of the business no longer meets the criteria of paragraph [980-10-15-2](https://asc.understandingaccounting.org/asc/980/10/#980-10-15-2) for application of this Topic.