Document ID: chunk:federal_register_of_legislation:F2022L00705:reg:5:p3
Version: federal_register_of_legislation:F2022L00705
Segment Type: reg
Provision Reference: reg 5 (pt 3/6)
Character Range: 18108–21303

AASB 15 and AASB 1058 in regard to other comments received from stakeholders and decided to consider that feedback in the forthcoming post-implementation review of AASB 1058 and guidance for not-for-profit entities in AASB 15. The Board also decided to provide further educational material to assist with the application of these Standards.

Initial measurement of right-of-use assets arising under concessionary leases
BC13            When the Board issued AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities, it intended to reassess the accounting policy choice in AASB 16 Leases paragraphs Aus25.1–Aus25.2 for the initial measurement of right-of-use assets arising under concessionary leases at cost or fair value when it had finalised two other projects (as noted in paragraph BC10 to AASB 2018-8, which accompanies versions of AASB 16 that incorporate those amendments). The two projects were the Not-for-Profit Private Sector Financial Reporting Framework project and the project to provide further guidance to assist not-for-profit entities in measuring the fair value of right-of-use assets.

Not-for-profit private sector lessees
BC14            The Board noted feedback from not-for-profit private sector stakeholders that, despite having the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost, uncertainty exists whether fair value information needs to be obtained for such right-of-use assets. This uncertainty exists because it is unclear whether the Board would be likely to require retrospective application of the initial fair value requirement if it decides in the future to remove the accounting policy choice to initially measure such right-of-use assets at cost. Stakeholders commented that if retrospective application was required, the collection of fair value information for historical concessionary leases, particularly those leases that have been in place for a significant period, would be costly and time consuming. At its November 2021 meeting, the Board discussed the initial measurement requirements for concessionary right-of-use assets with a view to providing certainty to not-for-profit private sector lessees.
BC15            The Board acknowledged that, conceptually, requiring right-of use assets arising under concessionary leases to be initially measured at fair value is consistent with the accounting treatment applied to other assets acquired on below-market terms and conditions and better reflects the value of the right-of-use asset obtained by the lessee in its financial position and financial performance. However, the Board considered that the costs required to obtain the fair value of such right-of-use assets would outweigh the benefits for not-for-profit private sector entities. This is because:
          (a)                    many not-for-profit private sector entities may not have the knowledge and experience in applying the principles of AASB 13 Fair Value Measurement because they generally do not measure non-financial assets at fair value. The cost and effort required to understand and apply AASB 13 requirements for