Rate-regulated Activities - IASB

Date recorded:

At its meeting on April 24, 2017, the IASB considered a revised general description of a new accounting model being developed to recognize regulatory assets and liabilities. The revised description explained the effect of regulatory agreements on customer contracts and on the entity’s financial results.

The Board’s discussion focused on regulatory agreements that include a rate adjustment mechanism that determines the amount of profit or profit margin that the entity is entitled to retain. The Board also discussed the nature of the adjustments, which arise due to: (i) variances between actual and estimated amounts; or (ii) temporary differences created when the regulated rate in one period includes amounts relating to required activities carried out by the entity in a different period.

The Board was not asked to make any decisions. The Board plans to discuss further aspects of the model in its May meeting.

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