Contracts for sales of capacity

27 March 2003   Related Documents Download Document Download Document Help Entities in some industries (such as telecommunications and electricity) sell rights to use capacity on their networks, sometimes entering into exchange or reciprocal transactions (‘capacity swaps’). Abstract 36 sets out the limited circumstances under which transactions in capacity should be reported as sales, and the proceeds reported as turnover. It also specifies that gains on exchanges of capacity should be recognised only in rare circumstances where the assets or services provided or received have a readily ascertainable market value. No accounting recognition should be given to transactions that are artificial or lacking in substance.