The US Financial Accounting Standards Board (FASB) has issued Accounting Standards Update (ASU) 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services.
ASU 2017-10 clarifies that the grantor in a service concession arrangement is the customer of the operation services in all cases for those arrangements.
An example is provided to illustrate application of ASU 2017-10: a public-sector entity grantor (government) enters into an arrangement with an operating entity under which the operating entity will provide operation services (which include operation and general maintenance of the infrastructure) for a toll road that will be used by third-party users (drivers). The example clarifies that the grantor (government), rather than the third-party drivers, is the customer of the operation services.
For an entity that has not adopted Topic 606, Revenue from Contracts with Customers, before the issuance of ASU 2017-10, the effective date for ASU 2017-10 is the same as the effective date (whether early or the required date for adoption) for Topic 606.
For an entity that has adopted Topic 606 before the issuance of ASU 2017-10, the effective date for ASU 2017-10 is as follows:
- For a public business entity; a not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market; and an employee benefit plan that files or furnishes financial statements with or to the Securities and Exchange Commission: the amendments are effective for fiscal years beginning after 15 December 2017, including interim periods within those fiscal years
- For all other entities, the amendments are effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019.
Earlier adoption is permitted for all entities, including within an interim period, subject to specific transition requirements.
ASU 2017-10 is available on this link.
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