Service Concession Arrangements

ASC 853 tells an operating entity how to account for a service concession arrangement — a contract with a public-sector grantor to operate (and possibly construct, upgrade, or maintain) the grantor's infrastructure, such as airports, roads, bridges, prisons, or hospitals, used to provide a public service (853-10-05-1). The arrangement is in scope only if the grantor controls or can modify/approve the services, the recipients, and the price, and controls any residual interest in the infrastructure at the end of the term (853-10-15-3); arrangements meeting Topic 980's scope apply Topic 980 instead (853-10-15-4). The central idea is that, for in-scope arrangements, the grantor is always deemed the customer of the operation services under Topic 606, the infrastructure is not the operating entity's PP&E, and the arrangement is not a lease under Topic 842 (853-10-25-1 through 25-2). Consideration may take the form of grantor payments, the right to charge third-party users, or an unconditional grantor guarantee of a minimum payment (853-10-05-2), and other elements such as construction services, receivables, and guarantees are accounted for under other Topics.

Subtopics

1. 10Overall11 ¶

   ASC 853-10 governs how an operating entity accounts for a service concession arrangement — a contract in which a public-sector grantor engages the operating entity to operate (and possibly construct, upgrade, or maintain) the grantor's infrastructure, such as airports, roads, bridges, prisons, or hospitals. The arrangement is in scope only if the grantor controls or can modify/approve the services, the recipients, and the price, and controls any residual interest in the infrastructure at the end of the term (853-10-15-3). In scope, the grantor is always deemed the customer of the operation services under Topic 606, the infrastructure is not recognized as the operating entity's PP&E, and the arrangement is not a lease under Topic 842 (853-10-25-1 through 25-2).

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