Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p83
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 222966–226028

requested guidance include:
(a)                    freehold land for which there is an active and liquid market;
(b)                   land not held in freehold title;
(c)                    residential or commercial properties located on freehold title;
(d)                   motor vehicles and other plant for which a primary market exists;
(e)                    buildings and other man-made structures other than those located on freehold title, where the buildings are of a nature and type similar to those traded in an active and liquid market; and
(f)                    infrastructure and other man-made assets other than those used primarily to generate profits (including roads, water, sewerage, recreational and park infrastructure assets).
BC228        The Board observed that for many of these types of assets, there does not appear to be a not-for-profit-specific aspect to the issue; therefore, issuing guidance for not-for-profit entities in relation to their application of AASB 13 could result in the guidance being applied by for-profit entities, potentially leading to their inadvertent non-conformity with IFRS Standards.
BC229        Paragraph 61 of AASB 13 requires an entity to use valuation techniques that:
(a)                    are appropriate in the circumstances and for which sufficient data are available to measure fair value; and
(b)                   maximise the use of relevant observable inputs and minimise the use of unobservable inputs.
BC230        A majority of stakeholders who provided input to the FVM project commented that the ability to apply judgement in the circumstances in choosing among the market approach, income approach and cost approach (or a combination of those approaches) generally works well for measuring the fair value of an asset. The Board considered this comment and formed the view that Australian Accounting Standards should not limit the application of the market approach, income approach or cost approach beyond any limits in the requirements of paragraph 61 of AASB 13.
BC231        Issuing the guidance requested by some stakeholders (ie specifying the approach to apply to different types of asset) would appear to conflict with the requirements of paragraph 61 of AASB 13 because it might constrain entities from using the best evidence of fair value in the circumstances. In addition, paragraphs 62 and 63 of AASB 13 indicate that using a combination of the market, income and cost approaches might be appropriate for various assets. Issuing guidance favouring particular approaches for particular types of assets might be incompatible with that 'combination of approaches' guidance in AASB 13.
BC232        Accordingly, the modifications to AASB 13 set out in this Standard (eg the modification of the guidance on 'financially feasible use' in paragraph Aus28.1) do not indicate that the income approach cannot be applied when measuring the fair value of a non-financial asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows.