Summary of Statement No. 101

Regulated Enterprises—Accounting for the Discontinuation of Application of FASB Statement No. 71 (Issued 12/88)


This Statement specifies how an enterprise that ceases to meet the criteria for application of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation, to all or part of its operations should report that event in its general-purpose external financial statements.

An enterprise's operations can cease to meet those criteria for various reasons, including deregulation, a change in the method of regulation, or a change in the competitive environment for the enterprise's regulated services or products. Regardless of the reason, an enterprise whose operations cease to meet those criteria should discontinue application of that Statement and report that discontinuation by eliminating from its statement of financial position the effects of any actions of regulators that had been recognized as assets and liabilities pursuant to Statement 71 but would not have been recognized as assets and liabilities by enterprises in general. However, the carrying amounts of plant, equipment, and inventory measured and reported pursuant to Statement 71 should not be adjusted unless those assets are impaired, in which case the carrying amounts of those assets should be reduced to reflect that impairment. The net effect of the adjustments should be included in income of the period of the change and classified as an extraordinary item.

This Statement is effective for discontinuations of application of Statement 71 occurring in fiscal years ending after December 15, 1988 but its adoption may be delayed until the issuance of annual financial statements for the fiscal year that includes December 15, 1989. Retroactive application to discontinuations reported prior to fiscal years ending after December 15, 1988 by restatement of the financial statements for the period including the date of discontinuation and periods subsequent to the date of the discontinuation is permitted but not required.