On 29 January 2009, the International Financial Reporting Interpretations Committee (IFRIC) issued Interpretation IFRIC 18 Transfers of Assets from Customers to address divergent practice in the accounting by recipients for transfers of property, plant and equipment from ‘customers’.

The Interpretation concludes that when the item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognise the asset at its fair value on the date of the transfer, with the credit recognised as revenue in accordance with IAS 18 Revenue. For many entities with these sorts of arrangements, this Interpretation is likely to result in deferral of revenue recognition or increased amounts being recognised as revenue, depending on the accounting policy previously adopted.

The Interpretation is to be applied prospectively to transfers of assets from customers received on or after 1 July 2009.

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