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IFRIC 12 Service Concession Arrangements

Standard 2024 Issued
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A service concession arrangement is an arrangement whereby a government or other public sector body contracts with a private operator to develop, operate and maintain an infrastructure asset such as a road, bridge, tunnel, airport, energy distribution network, prison or hospital. The government controls or regulates what services the operator must provide using the asset, to whom, and at what price, and also controls any significant residual interest in the asset at the end of the term of the arrangement.

IFRIC 12 clarifies that the operator does not recognise the related infrastructure as its property, plant and equipment because the operator does not have the right to control the use of the infrastructure. If the operator provides construction or upgrade services, the operator recognises an intangible asset to the extent that it receives a right to charge users of a public service and/or a financial asset to the extent it receives an unconditional contractual right to receive cash in exchange for its services. SIC-29 prescribes related disclosures.

Standard history

In November 2006 the International Accounting Standards Board issued IFRIC 12 Service Concession Arrangements. It was developed by the Interpretations Committee.

Other Standards have made minor consequential amendments to IFRIC 12. They include IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 15 Revenue from Contracts with Customers (issued May 2014), IFRS 9 Financial Instruments (issued July 2014), IFRS 16 Leases (issued January 2016) and Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018).