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  • IAS 37 Provisions, Contingent Liabilities and Contingent Assets (1998)


  • IFRIC D4 Issued 15 January 2004
  • Comment Deadline 19 March 2004
  • The draft Interpretation was available publicly on the IASB's Website during the comment period.
  • Click for Press Release (PDF 30k).
  • IFRIC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds issued in December 2004. Click for Press Release (PDF 64k).

Deloitte Letter of Comment on IFRIC D4

Important: IFRIC D4 resulted in the final IFRIC Interpretation 5, issued in December 2004. The information on this page reflects the IFRIC's discussions during the development of the final interpretation, including tentative decisions that were changed along the way. We have retained this page for historical purposes only.

Summary of IFRIC D4

Some entities have obligations to decommission assets or to perform environmental restoration or rehabilitation. Some such entities contribute to a fund established to reimburse the decommissioning, restoration or rehabilitation costs when they are incurred. The fund may be set up to meet the decommissioning costs of a single contributor or for many contributors.

The main proposals in the draft Interpretation are:

  • If an entity recognises a decommissioning obligation under IFRSs and contributes to a fund to segregate assets to pay for the obligation, it should apply IAS 27 Consolidated and Separate Financial Statements, SIC-12 Consolidation—Special Purpose Entities, IAS 31 Interests in Joint Ventures and IAS 28 Investments in Associates to determine whether decommissioning funds should be consolidated, proportionately consolidated or accounted for under the equity method.
  • When a fund is not consolidated, proportionately consolidated or accounted for under the equity method, and that fund does not relieve the contributor of its obligation to pay decommissioning costs, the contributor should recognise an asset (for rights to reimbursement from the fund) in addition to the liability for the decommissioning obligation.
  • A right to reimbursement should be measured at the lower of (i) the amount of the decommissioning obligation recognised and (ii) the contributor's share of the fair value of the net assets of the fund adjusted for actual or expected factors that affect the entity's ability to access these assets. Changes in the carrying amount of this right (other than contributions to and payments from the funds) should be recognised in profit or loss.

The IFRIC's proposals include an amendment to IAS 39 Financial Instruments: Recognition and Measurement so as to exclude from its scope rights to reimbursement for expenditure required to settle a liability recognised as a provision. Such rights will be accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

Correction list for hyphenation

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