• Framework for the Preparation and Presentation of Financial Statements
  • IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
  • IAS 11 Construction Contracts
  • IAS 16 Property, Plant and Equipment
  • IAS 17 Leases
  • IAS 18 Revenue
  • IAS 32 Financial Instruments: Disclosure and Presentation
  • IAS 38 Intangible Assets
  • IFRIC 4 Determining whether an Arrangement contains a Lease
  • SIC 29 Disclosure – Service Concession Arrangements


  • IFRIC D12, D13, D14 Issued 3 March 2005. Click for Press Release (PDF 61k).
  • Comment Deadline 3 May 2005 Extended to 31 May 2005
  • The draft Interpretations were available publicly on the IASB's Website during the comment period.
  • IFRIC Interpretation 12 Service Concession Arrangements was issued 30 November 2006. Click for Press Release (PDF 55k).

Deloitte Letter of Comment on IFRIC D12, D13, D14

Important: IFRIC D12, D13, and D14 resulted in the final IFRIC Interpretation 12, issued in November 2005. 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 D12, D13, D14

Service concession arrangements are arrangements whereby a government or other body grants contracts for the supply of public services, such as roads, energy distribution, prisons, or hospitals, to private operators.

D12 Service Concession Arrangements – Determining the Accounting Model

The operator may construct or acquire such infrastructure for the purpose of the concession. D12 proposes that if, as often happens, the grantor continues to control how the infrastructure is used both during and after the concession, the operator should not recognise that infrastructure as its own property, plant, and equipment. Rather, it should account for having provided construction services to the grantor under a construction contract and should account for the rights it receives in exchange for constructing the infrastructure using one of two accounting models:

  • (a) the financial asset model – if the grantor has the primary responsibility to pay the operator for the concession services; or
  • (b) the intangible asset model – if users have the primary responsibility to pay the operator for the concession services.

The financial asset model, which is described in Draft Interpretation D13, applies if the grantor (rather than users) has the primary responsibility to pay the operator for the concession services.

The intangible asset model, which is described in Draft Interpretation D14, applies in all other cases.

D13 and D14 provide guidance on how the operator should apply relevant IFRSs when it recognises a financial or intangible asset respectively. Both address the recognition and measurement of contract revenue and costs, and service concession assets and obligations (such as obligations to repair and maintain infrastructure).

D13 Service Concession Arrangements – the Financial Asset Model

Under the financial asset model, the right received by the operator in exchange for construction services or other consideration is accounted for as a financial asset. D13 describes how the financial asset model should be applied, including the following principles:


  • If it is probable that total contract costs will exceed total contract revenue, the expected loss shall be recognised as an expense immediately; otherwise, no obligation or related right shall be recognised to the extent that contracts are, and remain, executory.
  • An obligation shall be recognised when consideration is received in advance of performance.
  • An amount due from the grantor under a contract shall be recognised as a financial asset when the operator performs in advance of receiving consideration. This financial asset may be classified under IAS 39 as (a) loans and receivables, (b) available for sale, or (c) fair value through profit or loss (must be so designated on initial recognition).


  • Obligations under contracts shall be measured on the basis of the consideration received for their performance.
  • Financial assets shall be measured at fair value.

D14 Service Concession Arrangements – the Intangible Asset Model

In the intangible asset model, the service concession operator is regarded as receiving an intangible asset from the grantor in exchange for the construction or other services it provides to the grantor. The operator should recognise revenue and profit or loss on that exchange in accordance with IASs 11 and 18.

The revenue is measured at the fair value of the intangible asset received, adjusted by the amount of any cash or cash equivalents transferred. If the fair value of the intangible asset received cannot be measured reliably, revenue is measured at the fair value of the services provided by the operator, adjusted by the amount of any cash or cash equivalents transferred.

Obligations to construct new infrastructure, or to enhance existing infrastructure, are included in the consideration given for the intangible asset, and therefore in its cost. However, all other contractual obligations – including obligations to maintain, replace, or restore infrastructure – are excluded from the consideration given for the intangible asset.

Effective Dates

The three Interpretations are proposed to be effective for annual periods beginning on or after 1 January 2006. Early adoption would be permitted. Transition would generally be retrospective application unless restatement is impracticable.

SIC 29 Disclosure – Service Concession Arrangements

SIC 29 would be amended to add additional disclosures about service concession arrangements.

Comment Deadline

Comments are requested by 31 May 2005.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.