IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities

Synopsis

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.

• Read the unaccompanied version of IFRIC 1

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Which version of the interpretation?

Financial Reporting Faculty members who joined the faculty prior to 1 November 2022 have premium access to the consolidated edition of IFRS and amendments through the IASB's IFRS Standards Navigator service. Please log into IFRS Standards Navigator to access electronic versions of the standards through these links.

Please be aware that as part of the changes to ICAEW faculty membership, this service will be withdrawn after 31 December 2022.

Recent amendments

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IFRSs referred to by IFRIC 1

• IFRS 16 Leases
• IAS 1 Presentation of Financial Statements
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 16 Property, Plant and Equipment
• IAS 23 Borrowing Costs
• IAS 36 Impairment of Assets
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Current proposals

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’.

• Read ED/2019/7 General Presentation and Disclosures

This page was last updated 4 February 2022.