IAS 16 — Variable payments for asset purchases

Date recorded:

IAS 16 Property, Plant & Equipment and IAS 38 Intangible Assets- Variable payments for asset purchases- Agenda paper 8


The IFRS Interpretations Committee received a request to address the accounting for variable payments to be made for the purchase of an item of property, plant and equipment or an intangible asset that is not part of a business combination (‘asset purchases’). The Interpretations Committee discussed this issue at several meetings and was unable to reach a consensus on whether the purchaser must recognise a liability at the date it purchases the asset for variable payments that depend on the purchaser’s future activity or, instead, recognise such a liability only when the related activity occurs. There were divergent views as to whether variable payments meet the definition of a liability. The Interpretations Committee concluded that issue is too broad and tentatively decided not to take the issue onto its agenda. The purpose of this session was to analyse the comment letters received and discuss the staff recommendation.

Comment letters analysis

The staff indicated that the majority of respondents agreed that the issue was too broad and there was significant diversity in practice. Also, some respondents recommended referring the issue to the Board for further analysis. The staff indicated that it continued to believe that the accounting for variable payments should be addressed comprehensively and agreed to inform the Board of the issue, the Interpretations Committee’s discussion and the feedback received.

Staff recommendation

The staff recommendd finalising the agenda decision with consideration of some changes to the wording of the tentative agenda decision.


The Interpretations Committee approved the staff recommendation subject to some wording changes. It was also agreed to notify the issue to the Board because of the diversity in practice noted.

There were no significant concerns raised during the discussion. The staff was asked to analyse whether the wording of the agenda decision was in alignment with the agenda decision of service concession with variable payments.

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