IFRS 14: Regulatory Deferral Accounts
Kaleem Ullah Tipu ACA
Manager - I Tax at KPMG | ACA | FCCA | LL.B | VAT | Corporate Tax | Life Member - Lahore Tax Bar Association
1. Scope: IFRS 14 applies to the recognition, measurement, presentation, and disclosure of regulatory deferral account balances in financial statements prepared in accordance with IFRS.
2. First-time Adoption Relief: The standard provides a temporary exemption for entities that are first-time adopters of IFRS and that operate in rate-regulated activities from the requirements of certain IFRS standards, particularly IFRS 3 "Business Combinations," IFRS 10 "Consolidated Financial Statements," and IAS 12 "Income Taxes."
3. Recognition and Measurement: Regulatory deferral account balances are recognized and measured in accordance with the applicable IFRS standards. They are recognized as assets or liabilities when they meet the definition of assets or liabilities in the conceptual framework for financial reporting.
4. Presentation: Regulatory deferral account balances are presented separately on the face of the statement of financial position or in the notes to the financial statements.
5. Disclosure Requirements: Entities are required to disclose information that enables users of financial statements to understand the nature and effect of regulatory deferral account balances on the entity’s financial position, financial performance, and cash flows. This includes the nature and purpose of the regulatory deferral account balances, the regulatory framework, the methodology used to calculate the balances, and the significant judgments and estimates made by management.
6. Transition Provisions: The standard includes specific transition provisions for entities adopting IFRS 14 for the first time.
7. Consistency with IFRS Standards: Despite the temporary relief provided by IFRS 14, entities are still required to apply all other IFRS standards to the extent they are not specifically exempted by IFRS 14.
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