Download Quick Reference on Indian Accounting Standard (Ind AS) 114, Regulatory Deferral Accounts
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.
Rate-regulated activities are an entity’s activities that are subject to rate regulation.
A regulator is an authorised body empowered by statute or by any government or any authorised agency of a government to set rates that binds an entity’s customers.
Rate regulation is a form of regulation for setting an entity’s prices (rates) in which there is a cause-and-effect relationship between the entity’s specific costs and its revenues.
Regulatory deferral account balance is a ‘Regulatory Asset’ or a ‘Regulatory Liability’.
A regulatory asset is an entity’s right to recover fixed or determinable amounts of money towards incurred costs as a result of the actual or expected actions of its regulator under the applicable regulatory framework.
A regulatory liability is an entity’s obligation to refund or adjust fixed or determinable amounts of money as a result of actual or expected action of its regulator under the applicable regulatory framework.