SecProbe.io

January 27, 2014

Via U.S. Mail
Edward R. Cameron
President and Chief Executive Officer
Appliance  Recycling Centers of America, Inc.
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426 -4517

Re: Appliance Recycling Centers of America, Inc.
 Form 10-K for Fiscal Year Ended December 29, 2012
Filed March 22, 2013
Form 10 -Q for Fiscal Quarter Ended September 28, 2013
Filed November 7, 2013
File No. 0 -19621

Dear Mr. Cameron :

We have reviewed your response dated January 10, 2014  and have the following
additional comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.

Please respond to this letter within ten  business days by amending your filing s, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply  to your facts and circumstances or do not
believe an amendment is app ropriate, please tell us why in your response.

After reviewing any amendment to your filing s and the information you provide in
response to these  comments , we may have  additional comments.

Form 10 -K for Fiscal Year Ended December 29, 2012

Note 1. Nature of Business and Basis of Presentation, page 36

1. We reviewed your response to comment one in our letter dated December 27, 2013.
Please provide additional information regarding the factors considering in determining
that the AAP joint ventu re is a variable interest entity subject to the variable interest
entity (VIE) subsections of ASC 810.  In particular, please address the following:

 Please provide us a copy of the AAP joint venture agreement and tell us your
consideration of filing the a greement as an exhibit pursuant to Item 601 of Regulation
S-K.

Edward R. Cameron
Appliance Recycling Centers of America, Inc.
January 27, 2014
Page 2

  Tell us why the “business” exclusion from the scope of the VIE subsections of ASC
810 is not applicable in this case.  Refer to ASC 810 -10-15-17.d.  If  you believe AAP
was designed such  that su bstantially all of its activities either involve or are
conducted on behalf of you, as opposed to you and the joint venture partner, please
tell us the rights and obligations of 4301 Operations under the joint venture
agreement, including your understandin g of why 4301 Operations entered into the
joint venture agreement. If you believe you have provided more than ½ of the total
equity, subordinated debt and other forms of subordinated financial support to the
entity, please provide us your analysis of the f air values of each of the interests in the
entity.
 Notwithstanding the preceding bullet point and based on your assumption that the
business exclusion from the scope of the VIE subsections of ASC 810  does not apply
to AAP, please provide us additional su pport for your determination that AAP is a
variable as described in  ASC 810 -10-15-14.  In  particular, please tell us  the specific
provisions  in the joint venture agreement which lead you to conclude that by design :
o The total equity investment at risk i s not sufficient to permit AAP to finance
its activities without additional subordinated financial support; and
o Your voting rights are not proportional to your obligations to absorb the
expected losses of AAP, your rights to receive the expected residual r eturns of
AAP, or both.
Please note the phrase by design refers to entities that meet the condition of being a
VIE because of the way they are structured.  An entity under the control of its equity
investors that originally was not a VIE does not become one because of operating
losses.

We may have further comment regarding your analysis of the primary beneficiary of
AAP once we have a clearer understanding as to why you believe AAP is a variable
interest and not a voting interest entity under ASC 810.

In any event , please further revi se the disclosure you propose to include in future
filings regarding the consolidation of AAP, as the proposed disclosure remains unclear in
terms of your basis in GAAP for consolidating this entity.  For example, having a
controlling financial interest in  AAP  would be the basis in GAAP for consolidation,
whereas  having “significant influence” over the economic performance of AAP  would
not be a basis for consolidation .

Form 10 -Q for Fiscal Quarter Ended September 28, 2013

Note 10. Income Taxes, page 12

2. We reviewed your response to comment seven in our letter dated December 27, 2013.
We note the most significant item impacting the effective rate reconciliation for the nine
months ended September 28, 2013 is the release of your deferred tax valuation

Edward R. Cameron
Appliance Recycling Centers of America, Inc.
January 27, 2014
Page 3

 allow ance.  However we note the statement of cash flows does not reflect any change in
the valuation allowance against deferred tax assets during the period.  Please advise.

Note 12. Segment Information, page 14

3. We reviewed your response to comment eight in  our letter dated December 27, 2013.
Please note that any current period revision to your methodology for attributing costs
between reportable segments and unallocated corporate costs should be reflected
retroactive to the beginning of the periods present ed in order to conform to the current
year presentation.  Please revise your segment disclosures accordingly in future filings.

You may contact  Robyn Manuel , Staff Accountant , at (202) 551 -3823  or me at (202)
551-3849  if you have questions regarding our comments or any other questions.

Sincerely,

 /s/ James Allegretto

James Allegretto
Senior Assistant Chief Accountant