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IFRIC 1 applies where an entity has previously included decommissioning or restoration costs within the cost of an item of property, plant or equipment, and created a corresponding provision. Such a provision should be discounted to present values using a current market-based discount rate.
IFRIC 1 addresses changes in the value of the provision which may arise from:
- changes in the discount rate;
- revised estimates of the timing and amount of costs.
If an entity applies the cost model to property, plant and equipment, these changes in the value of the provision are required to be capitalised as part of the cost of the asset and depreciated.
If an entity applies the revaluation model to property, plant and equipment, the changes in value of the provision must be recognised as other comprehensive income and accumulated within the revaluation surplus.
ED/2019/7 General Presentation and Disclosures
ED/2019/7 General Presentation and Disclosures was issued in December 2019. The exposure draft proposes a new IFRS Standard to replace IAS 1. One of the proposed changes is to classify income and expenses in the statement of profit or loss as operating, investing or financing. In accordance with this, references to ‘finance costs’ in IFRIC 1 would be amended to be references to ‘interest expense not arising from financing activities’.
IFRS accounting standards referred to by IFRIC 1
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