IFRIC 18 Transfers of Assets from Customers
The IASB issued IFRIC 18 Transfers of Assets from Customers on 29 January 2009.
IFRIC 18 Transfers of Assets from Customers is likely to be particularly relevant for the utility sector. It clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water) or to do both. In some cases, the entity receives cash from a customer that must be used only to acquire or construct the item of property, plant and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services (or to do both). IFRIC 18 is available for eIFRS subscribers or can be purchased via the online shop.
Reasons for IFRIC 18
IFRSs, in particular the principles in IAS 18 Revenue, have been interpreted differently and the Interpretations Committee was asked to provide additional guidance on the accounting for transfers of assets from customers.
The Interpretations Committee released draft Interpretation D24 Customer Contributions for public comment in January 2008 and received 59 comment letters in response. The Interpretations Committee redeliberated the issue at its meetings in July, September and November 2008. At its meeting in November 2008, the Interpretations Committee completed its redeliberations, voted and confirmed the consensus (see summary of decisions and observer notes).
The interpretation clarifies:
- the circumstances in which the definition of an asset is met;
- the recognition of the asset and its measurement on initial recognition;
- the identification of the separately identifiable services (one or more services in exchange for the transferred asset),
- the recognition of revenue;
- the accounting for transfers of cash from customers.
Effective date and transition
IFRIC 18 requires entities to apply the Interpretation prospectively to transfers of assets from customers received on or after 1 July 2009.
The IASB issued IFRIC 18 Transfers of Assets from Customers on 29 January 2009. IFRIC 18 is available for eIFRS subscribers or can be purchased via our online shop.