IFRS in Focus — IFRS Interpretations Committee issues Draft Interpretation on the accounting for levies
This newsletter describes the proposals in the recently issued Draft Interpretation DI/2012/1 Levies Charged by Public Authorities on Entities that Operate in a Specific Market, published by the IFRS Interpretations Committee on 31 May 2012.
The draft Interpretation was developed in response to a request to
clarify when a liability should be recognised for levies that are conditional on an entity participating in an activity on a specified date.
The draft Interpretation addresses the following questions.
- What is the obligating event that gives rise to a liability to pay a levy?
- Does the economic compulsion to continue to operate in a future period create a constructive obligation to pay a levy that will arise from operating in that future period?
- Does the going concern principle imply that an entity has a present obligation to pay a levy that will arise from operating in a future period?
Download our analysis of the requirements of the Draft Interpretation below.