Wiley GAAP 2021, 2nd Edition

61ASC 853 SERVICE CONCESSION ARRANGEMENTS

1. Perspective and Issues
   1. Subtopic
   2. Scope
      1. Scope Exception
   3. Overview
2. Definitions of Terms
3. Concepts, Rules, and Examples
   1. Accounting for Service Concession Arrangements
      1. Service Concession Arrangements
      2. Economic Substance

PERSPECTIVE AND ISSUES

Subtopic

ASC 853, Service Concession Arrangements, contains one subtopic:

• ASC 853‐10, Overall, which addresses the accounting for service concession arrangements between a public sector entity grantor and an operating entity where the operating entity operates the grantor's infrastructure

Scope

ASC 853 applies to the accounting:

• By operating entities
  • Of a service concession arrangement
  • Under which a public‐sector entity grantor enters into a contract with an operating entity
  • To operate the grantor's infrastructure

The operating entity also may provide the construction, upgrading, or maintenance services of the grantor's infrastructure. (ASC 853‐10‐15‐2)

It is important to note that a service concession arrangement within the scope of ASC 853 must meet both of the following conditions:

1. The grantor controls or has the ability to modify or approve the services that the operating entity must provide with the infrastructure, to whom it must provide them, and at what price.
2. The grantor controls, through ownership, beneficial entitlement, or otherwise, any residual interest in the infrastructure at the end of the term of the arrangement.

   (ASC 853‐10‐15‐3)

Scope Exception A service concession ...