Subsurface rights (IFRS 16 Leases)

In 2019, the IFRS Interpretations Committee issued a tentative AD on specified underground space that is physically distinct and tangible.

A topical issue highlighted during the implementation of IFRS 16 Leases is how an entity should account for a contract that contains the right to place an oil pipeline, for example, in a specified underground space (subsurface rights). In March 2019, the IFRS Interpretations Committee (IFRS IC or the Committee) issued a tentative agenda decision (TAD) that highlighted that the specified underground space is physically distinct and tangible. Therefore, as the contract contains a lease, IFRS 16 applies to that contract.