incremental borrowing rate

This Subtopic tells regulated entities (utilities) how to account for property, plant, and equipment in three situations: plant abandonments, disallowances of costs of recently completed plants, and capitalization of an allowance for funds used during construction (AFUDC). When abandonment becomes probable, the asset's cost comes out of construction work-in-process or plant-in-service and a separate new asset is recorded — at full cost if a full return on investment is likely to be provided, or at the present value of expected future recovery revenues (discounted at the entity's incremental borrowing rate) if partial or no return is likely, with the shortfall and any probable, estimable disallowance recognized as a loss. When it becomes probable that part of the cost of a recently completed plant will be disallowed for rate-making purposes and the amount is reasonably estimable, that amount is deducted from the plant's reported cost and recognized as a loss.

ASC 842-20 governs how a lessee accounts for leases already classified as finance or operating leases under 842-10. At commencement the lessee recognizes a right-of-use asset and lease liability measured at the present value of unpaid lease payments (842-20-25-1; 30-1); thereafter finance leases produce separate amortization and interest (842-20-25-5), while operating leases produce a single straight-line lease cost (842-20-25-6). It also covers short-term lease policy elections, remeasurement, ROU asset impairment, leasehold improvements, subleases, terminations, and extensive presentation and disclosure requirements.