Customer contributions are transactions in which an entity – the access provider – receives an asset it uses to provide access to an ongoing supply of goods or services to a customer or customers. In some cases, the access provider receives cash which it must use to acquire or construct the asset that will provide access.
IFRIC D24 addresses a number of areas where practice is diverse. It clarifies in particular:
- whether a customer contribution should be recognised as an asset and, if so, whether it should be initially recognised at cost or fair value;
- whether an agreement to provide ongoing services using a contributed asset contains a lease;
- how to account for the credit that arises from the recognition of a customer contribution at fair value;
- how to account for a cash contribution.
IFRIC D24 proposes the following accounting for the receipt of customer contributions:
- All access providers will be required to recognise contributed assets and revenue from providing access to a supply of goods or services over the period access is provided.
- Those access providers that have previously not recognised contributed assets will now recognise increased property, plant and equipment and revenue.
- Those access providers that have previously recognised revenue immediately on the receipt of a contributed asset may now be required to recognise it over a longer period.
If finalised, the Interpretation would be applied prospectively, that is, for all future transactions.
Comment deadline is 25 April 2008. Click for Press Release (PDF 49k).
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