Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p62
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 62/91)
Character Range: 177142–180038

that differ from those for for-profit entities based on IFRS Standards.

BC66            In keeping with its decision not to specify measurement requirements in respect of an asset that is already the subject of an existing Australian Accounting Standard, the Board decided not to finalise proposed guidance on the measurement of taxation income (and other non-contractual receivables arising from statutory requirements) in AASB 1058, but as an amendment to AASB 9, made via AASB 2016-8.

Inventory

BC67            In its redeliberations, the Board noted that it had proposed in ED 260 for inventories acquired in a transaction that includes a donation by the vendor to measure the cost of those inventories at their fair value.  The Board observed that, before issue of this Standard, a not-for-profit entity is required to measure all inventory acquired at nil or nominal cost at current replacement cost (defined in paragraph Aus6.1 of AASB 102 Inventories as 'the cost the entity would incur to acquire the asset at the end of the reporting period').  The subsequent measurement requirements for inventories held for distribution refer to current replacement cost as one possible basis for identifying a loss in service potential.

BC68            The Board discussed a concern that it may be inappropriate to require all inventories acquired for consideration significantly less than fair value principally to enable the entity to further its objectives to be initially measured at fair value.  The Board observed that a day-one loss might arise in instances where current replacement cost (subsequent measurement requirements) as defined in AASB 102 was determined to be less than the fair value on initial recognition of inventories held for distribution.  Consequently, in finalising this Standard, the Board decided to instead require inventories acquired for consideration significantly less than fair value principally to enable the entity to further its objectives to be measured, on initial recognition, at their current replacement cost, rather than at fair value as proposed.  The Board considered this avoids inadvertently potentially creating new inventory measurement issues.  The Board decided to consider fair value measurement as part of a future project.

Bequests and endowments

BC69            In its redeliberations on ED 260, the Board observed differing treatments in practice as to when control of an item bequeathed to a not-for-profit entity is obtained, as some argue that control of a bequeathed item is obtained upon the death of the deceased person who made the Will, on the basis that the entity has a privileged position of being named as a beneficiary in that Will.  The Board considered that until no other party holds a right to challenge the Will, the entity does not have an enforceable right to receive the bequeathed items, and that it is likely that