IAS 37 · Transportation

IAS 37 Provision Calculator
for Transportation

Pre-configured for transportation provision types: vessel and aircraft decommissioning, environmental remediation for fuel spills and emissions, passenger compensation (EU261), vehicle recall provisions, and fleet lease reinstatement.

IAS 37 · LIVEv2026.04Legal Claim

Provision recognition, documented.
Not just calculated.

Session
0xBDF1
Reporting Date
FY 2026
Probability
75%
provision.conf
recognition.conf
ias37.md
01// engagement— IAS 37.84
02entity_name=
03reporting_date=
04currency=
06// obligation_type— IAS 37.10
07obligation.type=
09// recognition_criteria— IAS 37.14
10obligation_exists=
11probability_pct=% · >50% = probable
✓ probable threshold met (IAS 37.23)
12can_reliably_estimate=
Three-criteria checklist (IAS 37.14 — all must be met):
13
14
15
Three-criteria recognition checklist (IAS 37.14)
16// measurement— IAS 37.36-47
17method=
18best_estimate=€
20best_estimate.rationale=
Best-estimate rationale (IAS 37.36-40)
24// risk_uncertainty_adjustment— IAS 37.42-44
Risk & uncertainty considerations (IAS 37.42-44):
25
26
27
28
29
31risk_adj.rationale=
Risk & uncertainty adjustment (IAS 37.42-44)
34// discounting— IAS 37.45-47
35expected_timing_years=years
36pre_tax_rate=%
Rate derivation factors (IAS 37.47):
37
38
39
40
41
43discount.rationale=
Discounting · rate + rationale + unwinding (IAS 37.45-47 · 60)
48// reimbursement_rights— IAS 37.53-58
49virtually_certain=
recognition threshold
No reimbursement right that meets the 'virtually certain' threshold (IAS 37.53).
Reimbursement rights (IAS 37.53-58)
66// onerous_contract— IAS 37.66-69
67contract_revenue=€
68cost_of_fulfilling=€
69termination_penalty=€ · if terminate
Enter revenue + fulfilment cost to assess.
Onerous contract assessment (IAS 37.66-69)
74// prior_year_movement— IAS 37.84 · ISA 540
75prior_year_provision=€ · closing
76entity_revenue=€ · for benchmark
77total_liabilities=€
78materiality=€
Prior-year movement + benchmarks (ISA 540)
82// ias_12_deferred_tax— IAS 12.24
83tax_rate=%
Recognise DTA only to the extent that sufficient taxable profit is available (IAS 12.24).
IAS 12 deferred tax (IAS 12.24)
88// risk_warnings— rule engine · ISA 540
✓ No risk warnings raised.
Risk warnings · 8-rule engine (ISA 540)
92// disclosure_and_conclusion— IAS 37.84-92
Tick disclosure items addressed in FS note:
93IAS 37.84(a)
94IAS 37.84(b)
95IAS 37.84(c)
96IAS 37.84(d)
97IAS 37.84(e)
98IAS 37.85(a)
99IAS 37.85(a)
100IAS 37.85(b)
101IAS 37.85(c)
102IAS 37.86
103IAS 37.89
104IAS 37.92
99conclusion.narrative=
Disclosure checklist + conclusion (IAS 37.84-92)
recognize·—€·Ctrl+E
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PROVISION
—
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PRIMARY
CLASSIFICATION
RECOGNIZE
IAS 37.14
PROBABILITY
75%
probable
METHOD
Best Est.
IAS 37.40
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IAS 37 provisions in Transportation

Transportation and logistics companies carry provision portfolios shaped by high-value physical assets, environmental obligations, and passenger service regulations. Decommissioning provisions for old vessels, aircraft, and rolling stock are increasingly significant as environmental regulations tighten around end-of-life asset disposal. Environmental provisions cover fuel spill remediation, emission quota shortfalls, and contamination at terminals and depots. Passenger compensation provisions under EU Regulation 261/2004 (EU261) represent a unique, high-volume provision category for airlines: standardised compensation amounts (€250-€600 per passenger depending on flight distance) applied to delayed or cancelled flights create an expected value calculation across large passenger populations. Onerous route provisions arise when transportation operators are required to maintain unprofitable services under regulatory licences or public service obligations.

Measurement considerations for Transportation

EU261 passenger compensation provisions are well-suited to the expected value method because they involve large passenger populations with statistically predictable disruption patterns. Airlines should estimate the number of flights expected to trigger compensation obligations, the average number of affected passengers, and the applicable compensation amount by flight distance category. Historical disruption data (delays, cancellations) segmented by route, season, and cause provides the basis. Decommissioning provisions for vessels and aircraft should follow the same methodology as energy sector decommissioning: engineering estimates of removal and disposal costs at current prices, discounted to present value over the remaining useful life. Fleet lease return provisions require assessment of the cost to return leased assets in the condition specified by the lease agreement — for aircraft, this typically involves maintenance reserves for engine overhauls and airframe checks.

Regulatory context and audit considerations

EU261 creates statutory passenger compensation obligations that meet all IAS 37 recognition criteria. The IMO (International Maritime Organization) and ICAO (International Civil Aviation Organization) set environmental standards that create obligations for vessel and aircraft operators. National transport regulators may impose public service obligations that create onerous route provisions. The EU Ship Recycling Regulation and Basel Convention govern vessel decommissioning. Auditors should verify that transportation companies have identified all material regulatory obligations that give rise to provisions.

Common provision types in Transportation

environmental

Fuel spill remediation, emission penalties, environmental compliance costs for shipping and aviation

Typical: €500K-€50M Timeline: 1-15 years Method: Best Estimate
asset retirement

Decommissioning of old vessels, aircraft, rolling stock — increasingly regulated for environmental compliance

Typical: €1M-€50M per major asset Timeline: 5-25 years Method: Best Estimate
onerous contract

Onerous route provisions for unprofitable routes with service obligations (regulated transport)

Typical: NPV of future losses on route Timeline: Contract/licence term Method: Best Estimate
legal claim

Passenger compensation claims (EU261), cargo damage claims, personal injury

Typical: €250-€600 per passenger (EU261) Timeline: 1-3 years Method: Expected Value
lease reinstatement

Fleet return conditions for leased vehicles, aircraft, or vessels — maintenance condition requirements

Typical: Variable by asset condition Timeline: Remaining lease term Method: Best Estimate

Worked example: EuroWings Regional Airlines

An airline operates 15,000 flights per year. Historical data shows that 4.5% of flights trigger EU261 compensation obligations. Average affected passengers per qualifying flight is 85, with an average compensation of €380 per passenger:

Qualifying flights: 15,000 × 4.5% = 675 flights. Average passengers affected per qualifying flight: 85. Total passenger claims: 675 × 85 = 57,375 claims. Average compensation per claim: €380. Total EU261 provision = 57,375 × €380 = €21,802,500. This provision covers the period's expected compensation obligations. Historical claim rates should be updated seasonally (winter has higher disruption rates).

Provision Amount
€21.802.500
Regulatory Context: EU261 creates standardised passenger compensation obligations. IMO MARPOL Convention governs maritime environmental obligations. ICAO standards affect aviation environmental compliance. The EU Ship Recycling Regulation governs vessel decommissioning.

Frequently asked questions: Transportation

How should EU261 passenger compensation provisions be calculated?
EU261 provisions should use the expected value method applied to the airline's flight programme. Estimate: (1) the number of flights expected to trigger compensation (based on historical disruption rates by route and season), (2) the average number of affected passengers per disrupted flight, and (3) the applicable compensation amount by distance category (€250 for flights ≤1,500km, €400 for 1,500-3,500km, €600 for >3,500km). Exclude extraordinary circumstances that exempt the airline from compensation. Update estimates quarterly to reflect seasonal disruption patterns.
When should vessel or aircraft decommissioning provisions be recognised?
Decommissioning provisions for transport assets are recognised when a legal or constructive obligation to decommission arises. For vessels, this may be triggered by the EU Ship Recycling Regulation or flag state requirements. For aircraft, obligations arise from environmental regulations governing disposal of materials containing hazardous substances. The provision is measured at the best estimate of decommissioning cost, discounted to present value, with a corresponding increase in the asset's carrying amount under IAS 16.16(c).
How should onerous route provisions be measured for regulated transport operators?
Onerous route provisions arise when the unavoidable costs of operating a route under a public service obligation exceed the expected revenue (including any public subsidy). The provision equals the lower of the net cost of continuing to operate the route and the penalty for ceasing operations (which may include licence forfeiture and regulatory penalties). The cost of fulfilling includes both incremental operating costs and allocated directly related costs (per May 2020 amendment).
How do fleet lease return conditions create provisions for transportation companies?
Fleet lease agreements typically specify the condition in which assets must be returned — for aircraft, this includes engine overhaul status, airframe check completion, and interior condition. The provision for lease return conditions is recognised when the obligation arises (at lease inception or when the asset's condition deteriorates below return standards) and measured at the estimated cost to restore the asset to the required condition. For aircraft, engine overhaul costs can individually exceed €5-10M.
How should environmental fuel spill provisions be estimated for shipping companies?
Fuel spill provisions should be recognised when a spill event occurs and an obligation to remediate exists under maritime environmental regulations (MARPOL Convention, national legislation). The provision should include: emergency response costs, environmental clean-up costs, regulatory fines, and potential third-party claims. For significant spills, use the single best estimate method with expert environmental assessment. Consider whether insurance (P&I Club coverage) meets the virtually certain threshold for separate asset recognition.

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