IFRIC 12 - Service concession arrangements

Publication date: 03 Jan 2018

Resources (This includes links to the latest standards, drafts, PwC interpretations, tools and practice aids for this topic)


There is no specific IFRS that applies to public-to-private service concession arrangements for delivery of public services. IFRIC 12 ‘Service concession arrangements’ interprets various standards in setting out the accounting requirements for service concession arrangements while SIC 29 ‘Services concession arrangements: Disclosures’ contains disclosure requirements.

IFRIC 12 applies to public-to-private service concession arrangements in which the public sector body (the grantor) controls and/or regulates the services provided with the infrastructure by the private sector entity (the operator).

The concession arrangement also addresses to whom the operator should provide the services and at what price. The grantor controls any significant residual interest in the infrastructure.

As the infrastructure is controlled by the grantor, the operator does not recognise the infrastructure as its property, plant and equipment; nor does the operator recognise a finance lease receivable for leasing the public service infrastructure to the grantor, regardless of the extent to which the operator bears the risk and rewards incidental to ownership of the assets.

The operator recognises a financial asset to the extent that it has an unconditional contractual right to receive cash irrespective of the usage of the infrastructure. The subsequent accounting of the financial asset should consider the guidance in IFRS 9 ‘Financial instruments’.

The operator recognises an intangible asset to the extent that it receives a right (a licence) to charge users of the public service.

The operator accounts for revenue and costs relating to construction or upgrade services and operation services in accordance with IFRS 15, 'Revenue from contracts with customers'.

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