IAS 18, IAS 37 and IAS 39 — Regulatory assets and liabilities

Date recorded:


The Interpretations Committee received a request seeking clarification on whether a regulatory asset or regulatory liability should be recognised in a particular situation in which a regulated entity is permitted to recover costs, or required to refund some amounts, independently of the delivery of future services.

Specifically, the submitter asked two questions for the accounting under this situation:

  • Can the population of customers be regarded as a single unit of account?
  • If the population is a single unit of account, is it acceptable to recognise an asset or liability?


Decision not to add

November 2012



The Interpretations Committee did not address the two specific questions in the submission. However, regarding the question of the recognition of regulatory assets and liabilities generally, the Interpretations Committee noted that it had discussed in 2005 the subject of whether or not it would be appropriate to recognise a regulatory asset. At that time the Interpretations Committee concluded that an entity should recognise only assets that qualify for recognition in accordance with the IASB’s Conceptual Framework and with relevant IFRSs such as IAS 11 Construction Contracts, IAS 18 Revenue, IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. The Interpretations Committee noted that since the Interpretations Committee reached that conclusion there have been no major changes made to these IFRSs that warrant revisiting this issue.

The Interpretations Committee also noted that, in the IASB’s project on Rate-regulated Activities, the IASB had concluded that the issue could not be resolved quickly, and had therefore included requests for views on future plans for this project in its Agenda Consultation published in July 2011. In addition, the Interpretations Committee noted that in September 2012 the IASB had started to discuss its plan for the new Rate regulated Activities project following its decision in May 2012 to give priority to developing a standards level proposal for Rate regulated activities. At the September 2012 meeting, the IASB decided to develop a Discussion Paper for this project which it expects to publish in the second half of 2013.

Because of the position reached by the IASB in its last project on this subject, the Interpretations Committee observed that this issue is too broad for the Interpretations Committee to address within the confines of existing IFRSs and of the Conceptual Framework. Consequently, for this reason, and because the IASB has recently resumed a comprehensive project on Rate regulated Activities in which the IASB expects to publish a Discussion Paper in the second half of 2013, the Interpretations Committee decided not to add this issue to its agenda.


IFRIC reference:

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