cost-based rates

Industry1

1. 980-10Overall980 Regulated Operations

   ASC 980-10 sets the overall scope and framework for accounting by entities with rate-regulated operations. Because regulators sometimes allow costs into rates in a period different from when an unregulated entity would expense them, the rate-making process can create assets (regulatory assets), reduce assets, or create liabilities; an incurred cost the regulator permits to be recovered in a future period is accounted for like a cost reimbursable under a cost-reimbursement-type contract (980-10-05-5, 05-6). The Topic applies only to operations meeting the three criteria in 980-10-15-2 and provides incremental industry guidance that overrides conflicting guidance elsewhere in the Codification.