Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p127
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 335810–339039

of any finance costs to include in the subject asset's current replacement cost (if the entity determines that finance costs should be included in that asset's current replacement cost).
BC203        One respondent to ED 320 requested the Board to clarify the factors to consider regarding whether finance costs should be included in current replacement cost measurements of fair value (but without mandating either the inclusion or exclusion of funding costs in every circumstance). Consistent with paragraph BC197, the Board decided not to provide implementation guidance on those factors; since the IASB did not specify the treatment of finance costs for fair value measurements by for-profit entities, it would be inappropriate to mandate particular factors for not-for-profit entities to consider in applying AASB 13.

Other types of costs
BC204        During the outreach connected with the Fatal-Flaw Review draft, a stakeholder suggested the Board consider setting out all types of costs that would need to be considered in measuring the current replacement cost of an asset, for example the additional costs of compulsory acquisition of properties acquired to build a road. Furthermore, they suggested the Board includes an example illustrating a common circumstance in which the value for land and improvements is estimated jointly, with the value for the improvements being a residual after deducting the value of the land. The Board noted that the illustrative examples are meant to illustrate how to apply principles, not necessarily to reflect a particular or typical set of circumstances, and considers that illustrating how values are apportioned between land and improvements:
(a)                    would be a matter for detailed valuation assessments; and
(b)                   might imply restrictions on how valuers apply the market, income or cost approach.
     Therefore, the Board decided not to add such an example.

Obsolescence and depreciation expense
BC205        The Board has been requested to provide guidance on:
(a)                    economic obsolescence;
(b)                   curable and incurable physical obsolescence;
(c)                    adjusting for additional functionality in the modern equivalent reference asset;
(d)                   asset depreciation; and
(e)                    whether another description than 'accumulated depreciation' is permitted for disclosing the amount of accumulated obsolescence in financial statements.
BC206        Two respondents to ED 320 reiterated their requests for guidance on issues (b) and (d) and on the appropriate disaggregation of parts of an asset to ensure the correct calculation of depreciation expense.
BC207        Other than in respect of economic obsolescence (see paragraphs BC209–BC217), the Board decided that further guidance is not warranted regarding (b)–(e) above because:
(a)                    those issues are not specific to not-for-profit entities; and
(b)                   there does not appear to be any gap or other flaw in existing pronouncements that would cause financial statements of not-for-profit public sector entities to inadequately reflect the objectives and qualitative characteristics of financial