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The IFRIC Interpretation provides additional guidance on the accounting for transfers of assets from customers.
IFRIC 18 clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services. In some cases, the entity receives cash from a customer which must be used only to acquire or construct the item of property, plant and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services (or to do both).
IFRSs, in particular the principles in IAS 18 Revenue, have been interpreted differently and the IFRIC was asked to provide additional guidance on the accounting for those transfers of assets from customers. The interpretation clarifies:
Ø the circumstances in which the definition of an asset is met;
Ø the recognition of the asset and the measurement of its cost on initial recognition;
Ø the identification of the separately identifiable services (one or more services in exchange for the transferred asset),
Ø the recognition of revenue;
Ø the accounting for transfers of cash from customers.
The Interpretation is effective for annual periods beginning on or after 1 July 2009 and applies prospectively. However, limited retrospective application is permitted.