The Financial Accounting Standards Board has finalized its position and its rationale for barring companies from using the accrue-in-advance method of accounting for future major maintenance costs.
In its staff position, AUG AIR-1: Accounting for Planned Major Maintenance Activities, FASB says companies are prohibited from using the accrue-in-advance method—where companies project when a particular asset will require major maintenance and book a liability gradually leading up to the event—because it isn’t consistent with the concept of a liability.
