A Study on Accounting for Rate-regulated Activities under International Financial Reporting Standards
Date Issued
2010
Date
2010
Author(s)
Hung, Pei-Ling
Abstract
Rate regulation is a restriction on the setting of prices that can be charged to customers for services or products. There are a variety of models of rate regulation in practice. US generally accepted accounting principles have recognized the economic effect of rate regulation on US rate-regulated entities since at least 1962. In 1982, SFAS 71 formalized many of those principles. In the absence of specific national guidance, practice in many other jurisdictions followed SFAS 71.
The International Accounting Standards Board added the “rate-regulated activities” project to its agenda in December 2008 because of differences of views in practice about whether it was appropriate for entities to recognize assets and liabilities arising from rate regulation and ongoing requests for guidance on this issue. The Board has developed the proposed IFRS in September 2009 to define regulatory assets and regulatory liabilities, set out criteria for their recognition, specify how they should be measured and require disclosures about their financial effects.
The purpose of this paper is to investigate the exposure draft issued by IASB, the following IASB board meetings and the response to the exposure draft by others to understand the accounting for rate-regulated activities and to make suggestions.
Subjects
Rate regulation
Regulatory assets
Regulatory liabilities
Type
thesis
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