FASB proposes new guidance for service concession arrangements

By Ken Tysiac

FASB proposed new guidance Friday that is designed to eliminate diversity in practice in how operating entities determine who is the customer 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 will be accepted through Jan. 6 at FASB's website.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

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