The IFRS Interpretations Committee (IFRIC) have been discussing a request to clarify accounting for the net proceeds from selling any items produced while bringing an item of property, plant and equipment (PPE) to the location and condition necessary for it to be capable of operating in the manner intended by management. The submitter has asked whether the amount by which the net proceeds received exceed the costs of testing should be recognised in profit or loss, or as a deduction from the cost of the PPE. The submitter has also expressed concern about the lack of disclosure requirements about the accounting for the net proceeds from selling items produced and the costs of testing.
The analysis of the issue has been included in the agenda papers in July 2014 and the IFRIC has tentatively decided that it would not add this topic to the agenda. IFRIC considered that in the light of its analysis of the existing IFRS requirements, IAS 16 'Property, Plant and Equipment' and IAS 1 'Presentation of Financial Statements' contain sufficient guidance and neither an Interpretation nor an amendment to a Standard was necessary. Consequently, they tentatively decided not to add the issue to its agenda.
In our comment letter we agree that this issue should not be added to the IFRIC's agenda although we disagree with the rationale expressed in the tentative decision and the interpretive language it contains.
