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IFRIC 12 Service Concession Arrangements

IFRIC 12 provides accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.

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Summary

A service concession arrangement is an arrangement where a government or other body grants a contract for the supply of public services to a private operator.

IFRIC 12 identified two types of service concession arrangements:

  • One in which the operator has a contractual right to receive cash or another financial asset from the government.
  • One in which the operator has the right to charge for access to the service that it supplies. 

In the first arrangement the operator should recognise a financial asset at fair value to the extent that it has an unconditional contractual right to receive cash or another financial asset.

In the second arrangement the operator should recognise an intangible asset to the extent that it receives a right to charge users of the public service.

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IFRS accounting standards referred to by IFRIC 12

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