ASTM E3123-24
(Guide)Standard Guide for Recognition and Derecognition of Environmental Liabilities
Standard Guide for Recognition and Derecognition of Environmental Liabilities
SIGNIFICANCE AND USE
4.1 Use—this guide is intended for use on a voluntary basis for evaluating environmental liabilities, often with Guide E2137 for estimation and Guide E2173 for disclosure. The user may elect to apply this guide for any or all of these purposes:
4.1.1 Determining if an environmental risk or liability exists,
4.1.2 Determining if similar environmental risks (for example, permits, plant or process expansion) are being recognized at similar points in their lifecycle,
4.1.3 Determining if several similar environmental risks and liabilities are being managed to similar outcomes,
4.1.4 Determining liability values,
4.1.5 Due diligence analysis for proposed mergers, acquisitions, or spinoffs,
4.1.6 Documenting key decisions on environmental liability provisions, reserves, budgets and cash flow forecasts.
4.1.7 Identifying and analyzing liabilities associated with the following:
4.1.7.1 certain remedial alternatives,
4.1.7.2 future land uses, property transfer and redevelopment decisions,
4.1.7.3 land use alternatives for former landfills and chemically impacted sites,
4.1.7.4 Meeting regulatory requirements,
4.1.8 Designing and implementing project and program controls,
4.1.9 Defending against third-party lawsuits,
4.1.10 Calculating insurance premiums,
4.1.11 Making and settling insurance claims,
4.1.12 Making purchase accounting adjustments,
4.1.13 Preparing an audit defense, and
4.1.14 Completing financial and investment analysis.
4.2 Principles—the following principles are an integral part of this guide and should be used to resolve ambiguity or dispute regarding the recognition and derecognition of environmental liabilities. These principles are drawn from several sources, including historical and current accounting principles, court decisions, academic studies, as well as good commercial and customary practice.
4.2.1 Current awareness of an entity’s accounting framework and applicable generally accepted accountin...
SCOPE
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and customary practice for recognition and derecognition of environmental liabilities. This guide is consistent with Generally Accepted Accounting Principles (GAAP). Recognition of environmental liabilities is essential to determining the current book value of an entity. An entity may have future spending to extinguish risk and liabilities triggered in the past. Serious consequences, ranging from failed audits and poor capital stewardship to financial fraud and bankruptcy, exist for entities omitting material information from financial statements.
1.2 Objective—This guide enables users to reliably determine if a given type of environmental liability exists and subsequently has been settled, consistent with the accounting definitions in place.
1.3 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
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Standards Content (Sample)
This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E3123 − 24
Standard Guide for
1
Recognition and Derecognition of Environmental Liabilities
This standard is issued under the fixed designation E3123; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
3
1. Scope 2.2 FASB – Financial Accounting Standards Board
Statement of Accounting Concepts No. 6 Elements of Finan-
1.1 Purpose—The purpose of this guide is to provide a
cial Statements
series of options or instructions consistent with good commer-
Statement of Accounting Concepts No. 8 Conceptual Frame-
cial and customary practice for recognition and derecognition
work for Financial Reporting
of environmental liabilities. This guide is consistent with
ASC Topic 410-20 – asset retirement obligations
Generally Accepted Accounting Principles (GAAP). Recogni-
ASC Topic 410-30 – other environmental obligations
tion of environmental liabilities is essential to determining the
ASC Topic 420 – exit/disposal costs
current book value of an entity. An entity may have future
ASC Topic 440 – commitments
spending to extinguish risk and liabilities triggered in the past.
ASC Topic 450 – contingencies
Serious consequences, ranging from failed audits and poor
ASC Topic 460 – guarantees
capital stewardship to financial fraud and bankruptcy, exist for
ASC Topic 805 – business combinations
entities omitting material information from financial state-
ASC Topic 820 – fair value measurement
ments.
4
2.3 GASB – Government Accounting Standards Board:
1.2 Objective—This guide enables users to reliably deter-
Section A10: Certain Asset Retirement Obligations (origi-
mine if a given type of environmental liability exists and nally Statement 83)
subsequently has been settled, consistent with the accounting
Section F30 : Financial Guarantees
definitions in place. Section P40 : Pollution Remediation Obligations (originally
Statement 49)
1.3 This international standard was developed in accor-
Section L10 : Landfill Closure and Postclosure Care Costs
dance with internationally recognized principles on standard-
(originally Statement 18)
ization established in the Decision on Principles for the
Section 1500 : Reporting Liabilities
Development of International Standards, Guides and Recom-
Section 2250 : Additional Financial Reporting Consider-
mendations issued by the World Trade Organization Technical
ations
Barriers to Trade (TBT) Committee.
Section 3100 : Fair Value Measurement (originally GASB
72)
2. Referenced Documents
5
2.4 IASB–International Accounting Standards Board:
2
2.1 ASTM Standards:
IAS 37 – provisions, contingent liabilities and contingent
E2137 Guide for Estimating Monetary Costs and Liabilities
assets
for Environmental Matters
IFRS 3 –business combinations
E2173 Guide for Disclosure of Environmental Liabilities
IFRS 13 –fair value measurement
E3033 Guide for Beneficial Use of Landfills and Chemically
3. Terminology
Impacted Sites
Generally Accepted Accounting Principles:
3.1 Definitions: (italicization identifies defined terms.)
3.1.1 acceptable use—an environmental professional’s de-
scription of a proposed beneficial use, characterized by the
1 nature and duration of activities involved, for a property that is
This test method is under the jurisdiction of ASTM Committee E50 on
Environmental Assessment, Risk Management and Corrective Action and is the evaluated and determined to be protective of human health,
direct responsibility of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved March 1, 2024. Published April 2024. Originally
3
approved in 2017. last previous edition approved in 2018 as E3123–18. DOI: Available from Financial Accounting Standards Board 401 Merritt 7 P.O. Box
10.1520/E3123-24 5116 Norwalk, Connecticut 06856-5116, http://www.fasb.org
2 4
For referenced ASTM standards, visit the ASTM website, www.astm.org, or Available from Governmental Accounting Standards Board, 401 Merritt 7 P.O.
contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM Box 5116 Norwalk, Connecticut 06856-5116 http://www.gasb.org/
5
Standards volume information, refer to the standard’s Document Summary page on Available from International Accounting Standards Board, 30 Cannon Street
the ASTM website. London, EC4M 6XH United Kingdom http://www.ifrs.org
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
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E31
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This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E3123 − 18 E3123 − 24
Standard Guide for
1
Recognition and Derecognition of Environmental Liabilities
This standard is issued under the fixed designation E3123; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and
customary practice for recognition and derecognition of environmental liabilities. This guide is consistent with Generally Accepted
Accounting Principles (GAAP). Recognition of environmental liabilities is essential to determining the current book value of an
entity. An entity may have future spending to extinguish risk and liabilities triggered in the past. Serious consequences, ranging
from failed audits and poor capital stewardship to financial fraud and bankruptcy, exist for entities omitting material information
from financial statements.
1.2 Objective—This guide enables users to reliably determine if a given type of environmental liability exists and subsequently
has been settled, consistent with the accounting definitions in place.
1.3 This international standard was developed in accordance with internationally recognized principles on standardization
established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued
by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
2. Referenced Documents
2
2.1 ASTM Standards:
E2137 Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
E2173 Guide for Disclosure of Environmental Liabilities
E3033 Guide for Beneficial Use of Landfills and Chemically Impacted Sites
Generally Accepted Accounting Principles:
3
2.2 FASB – Financial Accounting Standards Board
Statement of Accounting Concepts No. 6 Elements of Financial Statements
Statement of Accounting Concepts No. 8 Conceptual Framework for Financial Reporting
ASC Topic 410-20 – asset retirement obligations
ASC Topic 410-30 – other environmental obligations
ASC Topic 420 – exit/disposal costs
ASC Topic 440 – commitments
ASC Topic 450 – contingencies
ASC Topic 460 – guarantees
ASC Topic 805 – business combinations
1
This test method is under the jurisdiction of ASTM Committee E50 on Environmental Assessment, Risk Management and Corrective Action and is the direct
responsibility of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved Feb. 1, 2018March 1, 2024. Published March 2018April 2024. Originally approved in 2017. last previous edition approved in 20172018 as
E3123–17. DOI: 10.1520/E3123-18–18. DOI: 10.1520/E3123-24
2
For referenced ASTM standards, visit the ASTM website, www.astm.org, or contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
3
Available from Financial Accounting Standards Board 401 Merritt 7 P.O. Box 5116 Norwalk, Connecticut 06856-5116, http://www.fasb.org
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1
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E3123 − 24
ASC Topic 820 – fair value measurement
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2.3 GASB – Government Accounting Standards Board:
Statement 10Section A10: – accounting and financial reporting for risk financing and related insurance issuesCertain Asset
Retirement Obligations (originally Statement 83)
Statement 18Section F30 – landfill closure and postclosure care costs: Financial Guarantees
Statement 49Section P40 – pollution remediation obligations: Pollution Remediation Obligations (originally Statement 49)
Statement 69Section L10 – government combinations and disposals of government operations: Landfill Closure and Postclosure
Care Costs (originally Statement 18)
Statement 70Section 1500 – nonexchange financial guarantees: Reporting Liabilities
Statement 72Section 2250 – fair value measurement and application: Additional Financial Reporting Considerations
Statement 83Section 3100 – certain asset retirement obligations: Fair Value Measurement (originally GASB 72)
5
2.4 IASB–International Accounting Standards Board:
IAS 37 – provisions, contingent liabilities and contingent assets
IFRS 3 –business combinations
IFRS 13 –fair value me
...
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