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17.9 Reapplication of regulatory accounting
Publication date: 31 Aug 2023
us Utilities guide
After a reporting entity has discontinued application of rate-regulated accounting, facts and circumstances may change such that ASC 980 should be reapplied. For example, a reporting entity may discontinue rate-regulated accounting due to uncertainty during a long rate freeze period. However, it may subsequently conclude that it is appropriate to reapply ASC 980 as a result of a return to full cost-based regulation. Such reapplication is accounted for as a change in application of an accounting principle as a result of changed circumstances. There are several accounting implications for regulated utilities that reapply regulatory accounting to all or a separable portion of the business, as highlighted in Figure UP 17-8.
Figure UP 17-8
Impact of reapplication of ASC 980
Impact of reapplication of ASC 980
Impact | Considerations |
|---|---|
Record amounts that meet the definition of regulatory assets and liabilities
| The carrying amounts of other assets and liabilities generally should not be adjusted, even if their carrying amounts may have been different had rate-regulated accounting never been discontinued.
|
Record assets for previously disallowed incurred costs that are subsequently allowed by a regulator, consistent with classification if costs had been initially allowed
| Reverse any impairment losses that were previously recorded under ASC 360 in connection with adopting ASC 980-20, if such amounts become probable of recovery as a result of a specific regulator action. See UP 18.7 for further information on regulatory accounting for impairment losses.
|
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