Consensus (INT12_08-15_COMPmay19_01-20)

Infrastructure within the scope of this Interpretation shall not be recognised as property, plant and equipment of the operator because the contractual service arrangement does not convey the right to control the use of the public service infrastructure to the operator. The operator has access to operate the infrastructure to provide the public service on behalf of the grantor in accordance with the terms specified in the contract.

Under the terms of contractual arrangements within the scope of this Interpretation, the operator acts as a service provider. The operator constructs or upgrades infrastructure (construction or upgrade services) used to provide a public service and operates and maintains that infrastructure (operation services) for a specified period of time.

The operator shall recognise and measure revenue in accordance with AASB 15 for the services it performs. The nature of the consideration determines its subsequent accounting treatment. The subsequent accounting for consideration received as a financial asset and as an intangible asset is detailed in paragraphs 23–26 below.

The operator shall account for construction or upgrade services in accordance with AASB 15.

If the operator provides construction or upgrade services the consideration received or receivable by the operator shall be recognised in accordance with AASB 15. The consideration may be rights to:

(a) a financial asset, or

(b) an intangible asset.

The operator shall recognise a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction services; the grantor has little, if any, discretion to avoid payment, usually because the agreement is enforceable by law. The operator has an unconditional right to receive cash if the grantor contractually guarantees to pay the operator (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received from users of the public service and specified or determinable amounts, even if payment is contingent on the operator ensuring that the infrastructure meets specified quality or efficiency requirements.

The operator shall recognise an intangible asset to the extent that it receives a right (a licence) to charge users of the public service. A right to charge users of the public service is not an unconditional right to receive cash because the amounts are contingent on the extent that the public uses the service.

If the operator is paid for the construction services partly by a financial asset and partly by an intangible asset it is necessary to account separately for each component of the operator’s consideration. The consideration received or receivable for both components shall be recognised initially in accordance with AASB 15.

The nature of the consideration given by the grantor to the operator shall be determined by reference to the contract terms and, when it exists, relevant contract law. The nature of the consideration determines the subsequent accounting as described in paragraphs 23–26. However, both types of consideration are classified as a contract asset during the construction or upgrade period in accordance with AASB 15.

The operator shall account for operation services in accordance with AASB 15.

The operator may have contractual obligations it must fulfil as a condition of its licence (a) to maintain the infrastructure to a specified level of serviceability or (b) to restore the infrastructure to a specified condition before it is handed over to the grantor at the end of the service arrangement. These contractual obligations to maintain or restore infrastructure, except for any upgrade element (see paragraph 14), shall be recognised and measured in accordance with AASB 137, ie at the best estimate of the expenditure that would be required to settle the present obligation at the end of the reporting period.

In accordance with AASB 123, borrowing costs attributable to the arrangement shall be recognised as an expense in the period in which they are incurred unless the operator has a contractual right to receive an intangible asset (a right to charge users of the public service). In this case borrowing costs attributable to the arrangement shall be capitalised during the construction phase of the arrangement in accordance with that Standard.

AASB 132, AASB 7 and AASB 9 apply to the financial asset recognised under paragraphs 16 and 18.

The amount due from or at the direction of the grantor is accounted for in accordance with AASB 9 as measured at:

(a) amortised cost; or

(b) fair value through other comprehensive income; or

(c) fair value through profit or loss.

If the amount due from the grantor is measured at amortised cost or fair value through other comprehensive income, AASB 9 requires interest calculated using the effective interest method to be recognised in profit or loss.

AASB 138 applies to the intangible asset recognised in accordance with paragraphs 17 and 18. Paragraphs 45–47 of AASB 138 provide guidance on measuring intangible assets acquired in exchange for a non-monetary asset or assets or a combination of monetary and non-monetary assets.

In accordance with paragraph 11, infrastructure items to which the operator is given access by the grantor for the purposes of the service arrangement are not recognised as property, plant and equipment of the operator. The grantor may also provide other items to the operator that the operator can keep or deal with as it wishes. If such assets form part of the consideration payable by the grantor for the services, they are not government grants as defined in AASB 120. Instead, they are accounted for as part of the transaction price as defined in AASB 15.