Service Concession Agreement Accounting

by admin on December 16th, 2020

Uyi is a partner with extensive experience in the areas of ifrs implementation, reporting and accounting services. His professional experience spans ten (10) years of consulting with various industrial companies… More Over the past decade, U.S. public infrastructure spending has exceeded $400 billion per year1, and trends suggest that even greater investments will be needed to maintain and modernize the aging of airport roads, bridges, ports and infrastructure. As governments and public sector organizations look for ways to outsource expensive public services, they are increasingly turning to service concession agreements. Under a service concession agreement, a public body grants an operator the right (a concession) to exploit an infrastructure value and to collect and collect royalties (for example. B tolls). Fees can be paid by users or directly by the government. The operator recognizes an intangible asset to the extent that it obtains the right (a licence) to charge utility users. The user`s right to pay for the public service is not an unconditional right to cash payment, since the amounts depend on the use of the public service.

IFRIC 12 allows for the possibility that both types of agreements can be concluded under a single contract: to the extent that the government has provided an unconditional payment guarantee for the construction of the public asset sector, the operator has a financial asset; to the extent that the operator must rely on the public use of the service to obtain payment, the operator has an intangible asset. Click on the IFRIC 12 service concession agreements – A practical Taschen guide (PDF 241k, February 2011, 59 pages). G. Contracting Business and VINCI Real Estate: construction and services contracts (extract) 16. Information on Construction Contracts and Services Accounting Methods Proceeds from construction and service contracts are accounted for in accordance with IFRS 15. IFRIC 12 does not deal with the accounts of the government side of the service concession agreements. IFRS is not intended for public service activities in the private or public sector. However, the International Public Sector Accounting Standards Board (IPSASB) has launched its own project on service concession agreements in Serden, which will take serious consideration of the accounts of licensees. The principles of IFRIC 12 are considered part of the project.

This treatment applies to most infrastructure concessions, in particular VINCI Autoroutes concessions in France, major airports managed by the VINCI Airports Group and certain bridges. IPSAS 32 also creates a symmetry with IFRIC 12 on relevant accounting issues (i.e.:

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