The Board finalised its discussion of issues to be included in the exposure draft on regulatory assets and liabilities and decided tentatively that:
- an entity should apply the IFRS to regulatory assets and liabilities existing at the beginning of the first comparative period presented in the annual financial statements in which the entity first applies the IFRS. Any adjustments arising on transition should be recognised in the opening balance of retained earnings.
- if amounts determined using the entity�s previous GAAP would otherwise be recognised separately as regulatory assets in accordance with IFRSs, first-time adopters of IFRSs could elect to include them in the carrying amount of property, plant and equipment or intangible assets.
- the cost of self-constructed property, plant and equipment or internally generated intangible assets should include all the amounts the regulator permits to be included in their cost, as an exception to the requirements in IAS 16 Property, Plant and Equipment, IAS 23 Borrowing Costs and IAS 38 Intangible Assets.
- an entity should consider the recoverability and impairment of regulatory assets by:
(a) considering the overall effect of regulatory assets on future rates and whether recovery is reasonably assured.
(b) if recovery is not reasonably assured, applying IAS 36 Impairment of Assets in testing for impairment the cash-generating unit that includes the net regulatory assets.
(c) allocating any impairment loss to individual regulatory assets in accordance with IAS 36 by considering when, and by how much, estimated future cash flows are affected.
(d) measuring the asset in subsequent periods using the amount and timing of the estimated cash flows used in determining the amount of the impairment loss.
The Board directed the staff to draft an exposure draft for ballot with publication expected in July.