FASB proposes new guidance for service concession arrangements

The change would clarify the 'customer' in certain arrangements.

New guidance proposed by FASB is meant to eliminate diversity of practice in service concession arrangements.

In a service concession arrangement, an operating entity operates infrastructure (such as airports, roads, bridges, tunnels, prisons, and hospitals) for a public-sector grantor for a specified period. FASB Accounting Standards Codification Topic 853, Service Concession Arrangements, applies to these arrangements.

Diversity in accounting practices has arisen from confusion over whether the public-sector grantors or third-party users of the infrastructure are the customer for certain service concession arrangements.

FASB's proposal, which originated with the board's Emerging Issues Task Force, would clarify that the grantor (government), rather than the third-party users, is the customer of the operation services for all service concession arrangements within the scope of Topic 853.

Comments can be submitted through Jan. 6 at FASB's website.

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