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IFRIC 12 – Classification of cash flows for construction (new)

Date recorded:

The Committee discussed a second question related to service concession arrangements. Specifically, the Committee was asked to clarify whether cash inflows and outflows related to construction services under a service concession arrangement should be classified as operating or investing cash flows or a combination of both.

The staff suggested the Committee recommend to the Board to amend IAS 7 Statement of Cash Flows through the annual improvements process to clarify the classification of cash inflows and outflows related to construction services in the scope of IFRIC 12 Service Concession Arrangements should be classified as operating activities.

The Committee generally supported the staff's conclusion that classification as operating was appropriate. However, one Committee member suggested that staff analysis needed to be better articulated. A few Committee members raised the question of whether this should be recommended to the Board for amending IAS 7 noting their decision during the previous day not to recommend another amendment to IAS 7 over concerns that they were creating proscriptive rules. However, ultimately the Committee did agree to recommend to the Board that IAS 7 be amended.