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IFRIC 5 Decommissioning, Restoration and Environmental Rehabilitation Funds

Published December 2004. Effective 1 January 2006.

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IFRIC 5 applies to those entities which establish and make contributions to decommissioning funds. Such funds are generally administered by separate trustees who invest contributions made by the entities in a range of assets and then reimburse the entities in the future for decommissioning costs paid.

IFRIC 5 addresses how a contributor should account for:

  • its interest in a decommissioning fund, and
  • the obligation to pay extra contributions.

The interpretation requires that IAS 27, SIC 12, IAS 28 and IAS 31 are applied in deciding how to account for an interest in a decommissioning fund. If none of these applies, then the future obligation and associated reimbursement are accounted for according to IAS 37.

Obligations to pay extra contributions should be accounted for in accordance with IAS 37.

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