F54 Contributions to a PFI contract by the purchaser may take a number of forms, including an up-front cash payment or the contribution of existing assets for development by the operator. The accounting treatment of such contributions depends on whether they give rise to future benefits for the purchaser. For example:
o If the contribution of an existing property results in lower service payments, the carrying amount of the property should be reclassified as a prepayment (current asset) and subsequently charged as an operating cost over the period of reduced PFI payments. If there is in effect a sale of part of the contributed asset (for example, a parcel of surplus land that is not used in the PFI contract), any profit should be recognised in accordance with paragraphs 23 and 24 (as explained in paragraphs 70-74).
o If the contribution does not give rise to a future benefit for the purchaser, it should be charged as an expense when the contribution is made. For example, a capital grant might be given for which the operator would have qualified even if the transaction had not been part of the PFI, or short-life assets might be donated to the contract for no value.