IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities
Published May 2004. Effective 1 September 2004.
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- Synopsis (including link to unaccompanied version of IFRIC 1)
- IFRSs referred to
- Current proposals
Financial Reporting Faculty members only
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.
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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
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’.
This page was last updated 4 February 2022.