The Interpretation states that for arrangements falling within its scope, the infrastructure assets are not recognised as property, plant and equipment of the operator.  Rather, depending on the terms of the arrangement, the operator will recognise:

• A financial asset; or
• An intangible asset; or
• Both a financial asset and an intangible asset (the 'bifurcated model').

On 30 November 2006, the International Financial Reporting Interpretations Committee (IFRIC) issued IFRIC 12 Service Concession Arrangements. The Interpretation addresses the accounting by private-sector operators involved in providing public sector infrastructure assets and services, such as schools and roads.

The Interpretation is effective for annual periods beginning on or after 1 January 2008, with early adoption permitted.

Please download our iGaap Alert for February 2007. (PDF, 72 KB).