Applying IFRS: a closer look at IFRS 20

This publication discusses the new requirements in IFRS 20 Regulatory Assets and Regulatory Liabilities.

IFRS 20 is effective for reporting periods beginning on or after 1 January 2029, with earlier application permitted. It introduces a comprehensive accounting model for regulatory assets and regulatory liabilities that is expected to affect entities subject to qualifying regulatory agreements. The key requirements include:

• Recognising regulatory assets and regulatory liabilities arising from differences in timing between the period in which regulatory goods or services are supplied and the period in which the related compensation is charged through regulated rates and hence included in revenue from contracts with customers recognised applying IFRS 15 Revenue from Contracts with Customers.
• Recognising regulatory income and regulatory expense so that total allowed compensation is reflected in the period in which the related regulatory goods or services are supplied.
• Measuring regulatory assets and regulatory liabilities using a cash-flow-based measurement technique, except where a simplified measurement approach is required.
• Presenting regulatory assets, regulatory liabilities, regulatory income and regulatory expense separately, together with disclosures designed to explain the effects of regulatory agreements on financial performance, financial position and prospects for future cash flows.
  

IFRS 20 also makes consequential amendments to other IFRS accounting standards, including IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 3 Business Combinations, IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 18 Presentation and Disclosure in Financial Statements, IFRS 19 Subsidiaries without Public Accountability: Disclosures and IAS 36 Impairment of Assets.