Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p44
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 134465–137608

have a right to use the asset subsequent to the sale of the electricity distribution business. The grantor therefore derecognises the asset under another Accounting Standard, such as AASB 116.

Example 5(b):  Privatisation
     IG30             In this example, the facts in Example 5(a) apply, except that:
          (a)                    the State Government (the grantor) enters into an arrangement with a private sector entity (the operator) to operate the electricity distribution business for 100 years, instead of the operator purchasing the business from the grantor; and
          (b)                   at the end of the arrangement (ie in 100 years' time), the distribution network reverts to the grantor. The operator must maintain the electricity distribution network to the specified age and condition at the end of the arrangement.
     IG31             Based on the facts and circumstances, the grantor determines:
          (a)                    the arrangement for the operator to operate the electricity distribution network is outside the scope of AASB 1059, as the grantor's protective rights to ensure electricity supply in certain circumstances do not mean that the operator provides the services on behalf of the grantor;
          (b)                   even if the arrangement was a service concession arrangement, it does not control the asset for recognition under paragraph 5(a), for the reasons outlined in paragraphs IG26(a)–(c); and
          (c)                    it controls the significant residual interest at the end of the arrangement, as the electricity distribution network reverts to the grantor at the end of the arrangement. Accordingly, the arrangement is a privatisation and not a sale.
     IG32             Based on the assessment in the previous paragraph, the grantor determines that it does not control the asset (the electricity distribution network) or have a right to use the asset under the arrangement. The grantor's protective rights do not give the grantor any more significant interest in the distribution network than it would have with those same rights in relation to an operator that had developed its own network. The grantor therefore derecognises the asset under another Accounting Standard, such as AASB 116, and determines whether it controls any other rights requiring recognition under another Accounting Standard.

Illustrative examples
These illustrative examples accompany, but are not part of, AASB 1059.
     IE1                 These examples consider only three of many possible types of service concession arrangements. Their purpose is to illustrate the accounting treatment for some features that are commonly found in practice. To make the illustrations as clear as possible:

          (a)                    It is assumed in Examples 6–7 that the term of the service concession arrangement is only ten years and that the operator's annual receipts are constant over that period. In practice, terms may be much longer and annual revenues may increase over time;

          (b)                   Examples 6 and 7 do not illustrate the accounting by the grantor