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FASB issues proposals concerning service concession arrangements

  • FASB (US Financial Accounting Standards Board) Image

Jul 19, 2013

The FASB has issued a proposed Accounting Standards Update (ASU), which specifies that "an operating entity should not account for a service concession arrangement within the scope of this proposed Update as a lease in accordance with Topic 840."

The main provisions provided in this proposed ASU are:

The proposed amendments would specify that an operating entity should not account for a service concession arrangement within the scope of this proposed Update as a lease in accordance with Topic 840. An operating entity would refer to other relevant Codification Topics as applicable to account for various aspects of a service concession arrangement. The proposed amendments also specify that the infrastructure used in a service concession arrangement would not be recognized as property, plant, and equipment of the operating entity.

On convergence with IFRSs, the FASB's guidance and IASB’s guidance are consistent about not considering a service concession arrangement as a lease. However, the IASB provides additional guidance on operating entities of service concession arrangements.

The proposed ASU had a comment deadline of September 17, 2013.

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