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IFRS Taxonomy 2020 – Illustrative examples

IFRS 14 Regulatory Deferral Accounts
Illustrative examples - example 17b

These examples accompany, but are not part of, the Standard.

Regulatory deferral account balances

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Example 2—Discontinued operations and taxation

IE3
Paragraphs 25 and 34 of this Standard require an entity to disclose the regulatory deferral account debit and credit balances and the net movement in those balances that relate to discontinued operations and disposal groups and to deferred taxes respectively. Paragraphs B19–B22 provide additional guidance relating to these disclosures. In particular, paragraphs B20–B21 permit an entity to present the regulatory deferral account amounts that are related to discontinued operations or disposal groups alongside the other regulatory deferral account amounts that are presented in the statement of financial position or the statement of profit or loss and other comprehensive income, or disclose them in the table that is required by paragraph 33. Example 2 illustrates how these requirements might be met, but is not intended to illustrate all aspects of this Standard or IFRS more generally.

IE4
In this example, the entity is in the process of disposing of one of its wholly-owned, rate-regulated subsidiaries and, consequently, is presenting the assets and liabilities of that subsidiary as a disposal group in the statement of financial position in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. In addition, the results of that subsidiary are presented in a single line item in the statement of profit or loss as a discontinued operation. The entity has decided that the amounts related to the regulatory deferral account balances included in the disposal group should be presented separately in the statement of financial position as permitted by paragraph B20.

IE5
In addition, the entity has decided to present separately the deferred tax asset balance that relates to the recognition of regulatory deferral account balances that are expected to be recovered (reversed) through future rates by presenting additional line items for the deferred tax asset balance and the movement in it, as permitted by paragraphs 24 and B11–B12.

Regulatory deferral account balances
Regulatory deferral account debit balances	20X6	Balances arising in the period	Recovery/reversal	Other movements	20X7	Remaining recovery/reversal period (years)
Electricity distribution
Construction costs	18,720	5,440	(80)	–	24,080	4-10
Storm damage	64,410	–	(12,060)	(9,800)	42,550	4
Other regulatory balances	6,270	2,320	(950)	–	7,640	4-10
Gas distribution
Pension costs	5,130	10,120	(2,980)	–	12,270	N/A
Gas cost variances	7,800	–	(3,900 )	–	3,900	1
	102,330	17,880	(19,970)	(9,800)	90,440
Disposal group	–	–	–	9,800	9,800
	102,330	17,880	(19,970)	–	100,240
Regulatory deferral account credit balances
Electricity distribution
Land disposal	–	19,000	–	–	19,000	10
Income tax	6,360	3,207	(1,093)	–	8,474	1-10
Gas distribution
Gas cost variances	600	4,000	(200)	–	4,400	2-3
Income tax	3,180	1,603	(547)	–	4,236	1-10
Decommissioning costs	66,330	(2,030)	(2,450)	(17,460)	44,390	3-20
	76,470	25,780	(4,290)	(17,460)	80,500
Disposal group	–	–	–	17,460	17,460
	76,470	25,780	(4,290)	–	97,960