Ind AS 114, Regulatory Deferral Accounts | Objectives | Scope

Ind AS 114

Ind AS 114, Regulatory Deferral Accounts: The objective of Ind AS 114 is to specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation.

An entity is permitted to apply the requirements of this Standard in its first Ind AS financial statements, if and only if, it:

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  • conducts rate-regulated activities; and
  • recognised amounts that qualify as regulatory deferral  account balances in its financial statements in accordance with its previous GAAP.

Ind AS 114

An entity shall apply the requirements of the Standard in its financial statements for subsequent periods, if and only if, in its first Ind AS financial statements, it recognised regulatory deferral account balances by electing to apply the requirements of this Standard.

An entity that is within the scope of, and that elects to apply, th is Standard shall apply all of its requirements to all regulatory deferral account balances that arise from all of the entity’s rate-regulated activities.

An entity that has rate-regulated activities and that is within the scope of, and elects to apply, this Standard shall apply paragraphs 10 and 12 of Ind AS 8 when developing its accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances.

On initial application of this Standard, an entity shall continue  to  apply previous GAAP accounting policies for the recognition, measurement, impairment and derecognition of  regulatory  deferral  account  balances, except for any changes permitted by paragraphs 13–15 of the Standard. However, the presentation of  such amounts shall comply with the

presentation requirements of this Standard, which  may  require changes to the entity’s previous GAAP presentation policies.

An entity shall not change its accounting policies in order  to  start  to  recognise regulatory deferral account balances. An entity may only change    its accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances, if the change makes  the financial statements more relevant to the economic  decision-making needs of users and no less reliable, or more reliable and no less relevant to those needs. An entity shall  judge  relevance and reliability using the criteria  in paragraph 10 of Ind AS 8.

Any specific exception, exemption or additional requirements related to the interaction of the Standard with other Standards are contained within the Standard. In the absence of any such exception, exemption or additional requirements, other Standards shall apply to regulatory deferral account balances in the same way as they apply to assets, liabilities, income and expenses that are recognised in accordance with other Standards.

An entity shall present separate line items in the balance sheet for:

  • the total of all regulatory deferral account debit balances; and
  • the total of all regulatory deferral account credit

An entity that elects to apply this Standard shall disclose information that enables users to assess:

  • the nature of, and the risks associated with, the rate regulation that establishes the price(s) that the entity can charge customers for the goods or services it provides; and
  • the effects of that rate regulation on its financial position, financial performance and cash

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