IAS 17 Consideration of the issues addressed in UITF Abstract 36 Contracts for sale of capacity

Date recorded:


Some “sales” contracts, such as those found in the telecommunications and electricity industries, convey to the purchaser a right to use some or all of the capacity of a network operated by the seller for an agreed period. The IFRIC considered addressing the issue of contracts for sales of capacity and, in particular:

(a) Should the seller derecognise the asset recognised for the capacity sold?

(b) When should income from the sales be recognised?

(c) Should the treatment of sales be the same when all or part of the consideration received is capacity on another entity’s network?

(d) Should the seller present the consideration received or receivable from a sale as revenue or another form of income?


Decision not to add

October 2003



The IFRIC decided to defer consideration of whether to address this issue until after it finalises its Interpretation on Determining Whether an Arrangement Contains a Lease.


Draft Interpretation D3 Determining whether an Arrangement contains a Lease was issued by the IFRIC in January 2004, with a comment deadline of 19 March 2004.   Redeliberation of the Draft Interpretation commenced in May 2004.  The IFRIC is expected to vote on a final Interpretation at its October 2004 meeting.


IFRIC reference: IAS 17

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