SIC 29:SERVICE CONCESSION ARRANGEMENTS-Disclosures

SIC 29 provides guidance on the disclosures of the information that should be disclosed in the notes to the financial statements of a concession provider and a concession operator when the two parties get joined through a service concession arrangement.


A service concession arrangement exists when one enterprise (concession operator) agrees with another enterprise (concession provider) to provide such services that give the public access to the economic and social facilities.


Example of service concession arrangements includes the supply of clear water to the public, maintaining roads and highways, car park facilities, tunnels, bridges, telecommunication, and airport maintenance services. However, outsourcing of the internal maintenance services does not constitute a service concession arrangement, for example, providing cafeteria services to employees, building maintenance services, and provision of the information technology services.


As per SIC 29, the following information shall be disclosed in each period:


=> A detailed description of the service concession arrangement.

=> The significant terms of arrangement that may affect the timing and uncertainty of the future cash flows.

=> Any changes occurred in concession arrangement during the period.

=> How the service arrangement has been classified.

=> The amount of profit or revenue or loss recognized as a result of the exchange of the construction service for an intangible asset or financial asset.

=> The rights and obligations of each party in a service concession arrangement.

=> The renewal and termination options are available to the parties in the service concession arrangement.