Accounting – FAQ September 2011

This month’s frequently asked questions address the new TFRS for NPAEs’ treatment of decommissioning costs and how to account for shared assets.

Keywords: Thailand, Accounting, TFRS, NPAEs, Decommissioning Costs, Shared Assets

Provision for Decommissioning Costs

TFRS for NPAEs requires entities to recognise a provision for decommissioning costs, for example, an estimate of the costs of removing an asset.

  • Is there a requirement to recognise a provision for those assets acquired in previous years?

No, it should not be retrospectively applied. It is effective for financial periods commencing on or after 1 January 2011

  • Should a provision be recognised if the timing of any decommissioning costs is uncertain?

No provision is required if the timing of such an obligation is as yet unknown.

Shared Assets

Four entities in the same group of companies invest to develop a server or data centre as a shared resource.

  • How does each company recognise the shared asset?

There are two options:

  1. (Recommended) One of the four companies is deemed to be the owner of the server or data centre. This company will have all the rights and control over the assets. A service fee will then be charged to each of the other three companies.
  2. Each company recognises the assets in which it invested.