What are IFRIC and SIC interpretations?
The IFRS Interpretations Committee is the IASB's body for questions about how the standards apply in practice. When a widespread question has diverse practice and can be answered within the existing standards, it can develop an interpretation, which is exposed for comment, finalised by the Committee and approved by the IASB. The interpretations are numbered IFRIC 1 onwards; those issued before 2002 by its predecessor, the Standing Interpretations Committee, are numbered SIC. Under IAS 8, interpretations rank with the standards themselves, so a company that does not apply one cannot say it complies with IFRS. Interpretations that are no longer needed are withdrawn or replaced by amendments, which is why the numbers have gaps.
How do agenda decisions fit in?
When the Committee decides not to add a question to its agenda, it publishes an agenda decision explaining why, often with an analysis of how the existing requirements apply to the facts. Agenda decisions do not change the standards and have no effective date, but they can change practice, and companies are expected to apply them with sufficient time to implement any change, usually months rather than years. Well-known examples include the 2019 and 2021 decisions on cloud computing, which led many companies to expense software configuration costs they had capitalised, the 2020 decision on supplier finance arrangements, and the April 2024 decision on climate-related commitments under IAS 37. See the Conceptual Framework and IAS 8, which covers how to account for a change in policy that follows an agenda decision.
Which interpretations are in issue?
| Interpretation | Subject | The question it answers | Guide |
|---|---|---|---|
| IFRIC 1 | Changes in existing decommissioning, restoration and similar liabilities | How changes in the estimate or discount rate adjust the related asset | Decommissioning costs |
| IFRIC 2 | Members' shares in co-operative entities | When members' shares that can be redeemed are equity | IAS 32 debt or equity |
| IFRIC 5 | Rights to interests in decommissioning funds | How a contributor accounts for its interest in a separate fund | Mine rehabilitation |
| IFRIC 6 | Waste electrical and electronic equipment | When the obligation for historical household equipment arises | IAS 37 provisions |
| IFRIC 7 | Applying the restatement approach under IAS 29 | How to restate in the first year an economy is hyperinflationary | IAS 21 vs ASC 830 |
| IFRIC 10 | Interim financial reporting and impairment | Goodwill impairments recognised at an interim date are not reversed | IAS 34 interim reporting |
| IFRIC 12 | Service concession arrangements | How operators of public infrastructure, such as toll roads, account for it | IFRS 15 revenue |
| IFRIC 14 | The limit on a defined benefit asset and minimum funding | How much of a pension surplus can be recognised | IAS 19 employee benefits |
| IFRIC 16 | Hedges of a net investment in a foreign operation | Which risks and which group entities qualify in a net investment hedge | IFRS 9 hedge accounting |
| IFRIC 17 | Distributions of non-cash assets to owners | Dividends in kind are measured at the fair value of the assets | IFRS 5 vs ASC 205-20 |
| IFRIC 19 | Extinguishing financial liabilities with equity instruments | Shares issued to settle debt are measured at fair value, with a gain or loss | IFRS 9 derecognition |
| IFRIC 20 | Stripping costs in the production phase of a surface mine | When waste removal costs become an asset | Stripping costs |
| IFRIC 21 | Levies | A levy is recognised when the activity that triggers it occurs | IAS 34 vs ASC 270 |
| IFRIC 22 | Foreign currency transactions and advance consideration | The exchange rate for an item paid for in advance is the rate on the payment date | IAS 21 foreign currency |
| IFRIC 23 | Uncertainty over income tax treatments | How to reflect tax positions the tax authority may not accept | IFRIC 23 explained |
| SIC-7 | Introduction of the euro | How IAS 21 applied to the changeover to the euro | None |
| SIC-10 | Government assistance with no specific relation to operating activities | Such assistance is a government grant under IAS 20 | IAS 20 grants |
| SIC-25 | Changes in the tax status of an entity or its shareholders | The tax effects of a change in status go to profit or loss, unless they relate to equity items | IAS 12 income taxes |
| SIC-29 | Service concession arrangements: disclosures | What operators and grantors disclose about concessions | None |
| SIC-32 | Intangible assets: web site costs | Which website development costs can be capitalised | IAS 38 intangibles |
IFRIC 22 in practice: an advance payment in a foreign currency
A company whose functional currency is the CU orders a machine for USD 100,000. It pays a 40% advance of USD 40,000 on 1 March, when USD 1.25 buys CU 1, and the machine is delivered on 1 June, when the rate is USD 1.1, with the balance of USD 60,000 payable later.
| Part of the price | Rate used | CU |
|---|---|---|
| Advance of USD 40,000, a non-monetary prepayment | 1.25, the date it was paid | 32,000 |
| Balance of USD 60,000, a monetary payable | 1.1, the delivery date | 54,545 |
| Cost of the machine | 86,545 |
The prepayment is a non-monetary asset, so it is not retranslated: when the machine arrives, it simply becomes part of the machine's cost at the rate on 1 March. Had the whole price been translated on delivery, the cost would have been CU 90,909. The balance is a monetary payable, retranslated at each reporting date until it is paid, with differences in profit or loss. The same logic applies to a customer's advance for revenue, which is recognised at the rate on the date the advance was received. See IAS 21 foreign currency.
Why does IFRIC 21 matter for interim reports?
IFRIC 21 recognises a levy, such as a property tax or a bank levy imposed by law, when the activity that triggers it occurs, not spread over the year. A levy triggered by owning property on 1 January is recognised in full on that date, so a company reporting quarterly shows the whole cost in its first quarter. US GAAP spreads property taxes over the year, so this is one of the clearest interim differences. See IAS 34 vs ASC 270.
Does US GAAP have interpretations?
The FASB's Emerging Issues Task Force played a similar role for US GAAP, and its consensuses, once ratified by the FASB, are issued as Accounting Standards Updates and become part of the Codification, so there is no separate body of interpretations. SEC staff guidance applies to public companies. See what is US GAAP and every IFRS and IAS explained in one line.
Keep going
Our free Excel models work through the examples in these guides, and the comparisons show where IFRS and US GAAP part ways. Every guide names the Chartered Accountant who wrote it and the one who reviewed it.
Questions people ask
What is an IFRIC interpretation?
Guidance developed by the IFRS Interpretations Committee and approved by the IASB that answers a specific question about applying IFRS Accounting Standards; it has the same authority as the standards.
How many IFRIC interpretations are there?
15 IFRIC interpretations and 5 SIC interpretations are in issue; IFRIC 23, issued in 2017, is the most recent.
Are IFRIC agenda decisions mandatory?
They do not add requirements, but they explain how the standards apply, so a company whose policy conflicts with one is expected to change it, with sufficient time to implement the change.
What does IFRIC 22 say?
For a foreign currency transaction with an advance payment or receipt, the exchange rate is the one on the date the advance was paid or received, because the prepayment or deferred income is a non-monetary item.
Sources
The standards, updates and other documents this guide draws on.
- IFRS Foundation: list of IFRS Accounting Standards and Interpretations
- IFRS Interpretations Committee: Customer's right to receive access to the supplier's software hosted on the cloud (March 2019)
- IFRS Foundation: Climate-related Commitments (IAS 37), agenda decision, April 2024
- EY: IFRS Update of standards and interpretations in issue at 30 June 2026
Rules and fees change. If you are reading this long after October 26, 2026, confirm the figures with the source before you rely on them.
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This guide is general information. It is not tax or legal advice for your situation.