This Example illustrates the guidance in paragraphs
.
Those items should be reported as follows as of December 31, 19X1.
All of those items should be eliminated from the entity's statement of financial position when it ceases to apply this Topic. The resulting charge to income should be reported as an unusual or infrequently occurring item in the period that includes December 31, 19X1. The entity should no longer defer those costs and report them as assets because they could not be reported as assets by entities in general. Entities in general would report a receivable for those items only if a right to receive payment exists as a result of past events or transactions and regardless of future transactions (such as future sales).
For example, a contract between a supplier and a customer for the sale of fuel oil may specify that next year's sales price will be adjusted based on the supplier's current-year cost of fuel oil. Even though it is probable that a future economic benefit (the ability to charge a higher price in the future) will result from the supplier's current-year cost of fuel oil, no asset exists at the end of the current year because the transactions (sales to the customer) that give the supplier control of the benefit are in the future. However, if the contract provides that the customer is obligated to pay additional amounts related to past purchases and regardless of future purchases, the supplier has an asset and it does not matter whether that payment is made in a single amount or when the customer will pay for next year's purchases.
This Example illustrates the guidance in paragraphs
.
Those items should be reported as follows as of December 31, 19X2.
The portion of the deferred gain allocable to State 1 (determined in this Example to be 40 percent of $50,000, or $20,000) should be eliminated from the entity's statement of financial position when it ceases to apply this Topic to its operations in State 1. No adjustment should be made for the deferred gain applicable to State 2. The regulatory-created accrual for revenues subject to refund in State 1 should be eliminated. Whether any liability related thereto exists should be determined under generally accepted accounting principles (GAAP) for entities in general. For example, amounts that were collected in the current or prior periods for which refunds will be made regardless of future sales should continue to be reported as liabilities after application of this Topic is discontinued. The credit to income resulting from the above adjustments should be reported as an unusual or infrequently occurring item in the period that includes December 31, 19X2.
This Example illustrates the guidance in paragraphs
.
The following reporting is required for that regulatory-created asset.
Utility C should eliminate that regulatory-created asset from its statement of financial position when the entity ceases to apply this Topic. The charge to income should be reported as an unusual or infrequently occurring item in the period that includes June 30, 19X3.
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\"Deferred gain on restructuring debt, being amortized for rate-making purposes on an allocated basis by both states\"\t\" $50,000 \" \"Revenues collected subject to refund in prior years in State 1, expected to be refunded through future rates\"\t\" $75,000 \"\t