PracticeAuditIASB issues guidance on property restoration

IASB issues guidance on property restoration

A new draft interpretation has been released containing guidance on accounting for the decommissioning and restoration of a property, plant and equipment.

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As the date for international accounting standards draws ever closer, Draft Interpretation D2, published by the IASB’s International Financial Reporting Interpretations Committee, guides companies on how changes in the estimated outflow of resources such as cash flow, the current market-assessed discount rate and an increase that reflects the passage of time should be accounted for.

The guidance is issued in accordance with IAS 19 – Property, Plant and Equipment and relates to decommissioning, restoration and similar liabilities that are recognised both as part of the cost of an item of property, plant and equipment.

The public can comment on this proposal until 3 November 2003.

Sir David Tweedie, chairman of the IASB welcomed the proposal, although he recognised that finding a suitable approach for such accounting changes was ‘challenging and potentially controversial’.

‘I urge constituents most affected by the proposals to take an active part in the IFRIC consultation process by responding to the exposure draft,’ he added.

The complete text of the draft is available on the IASB website at www.iasb.org.uk.

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