IFRIC 5 Decommissioning, Restoration and Environmental Rehabilitation Funds

Synopsis

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.

• Read the unaccompanied version of IFRIC 5

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IFRSs referred to by IFRIC 5

• IFRS 9 Financial Instruments
• IFRS 10 Consolidated Financial Statements  
• IFRS 11 Joint Arrangements
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 28 Investments in Associates and Joint Ventures  
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets

This page was last updated 4 February 2022.