Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p96
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 291523–294563

third-party usage of a service concession asset, with or without guaranteeing a minimum amount to the operator. This contrasts with AASB Interpretation 12, which links the recognition of a financial asset by an operator to a guarantee of the cash flows by the grantor. Under Interpretation 12, the operator's cash flows are conditional on usage when it has no such guarantee.

Basis for Conclusions on AASB 2019-2
This Basis for Conclusions accompanies, but is not part of, AASB 1059. The Basis for Conclusions was originally published with AASB 2019-2 Amendments to Australian Accounting Standards – Implementation of AASB 1059.

Introduction
     BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard. It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Background

Reasons for issuing this Standard

     BC2               The Board received feedback from some public sector stakeholders regarding issues applying the modified retrospective method to measure the Grant of a Right to the Operator (GORTO) liability stated in paragraph C4(c) of AASB 1059 Service Concession Arrangements: Grantors. Stakeholders also commented that, since mandatory application of AASB 1059 has been deferred by one year to annual periods beginning on or after 1 January 2020, it would be possible for some service concession arrangements to be captured by AASB 16 Leases prior to the application of AASB 1059. Stakeholders expressed a view that applying AASB 16 for one year to service concession arrangements could be onerous. The Board considered stakeholders' feedback and decided to propose amendments to AASB 16 and AASB 1059 to address these issues. The Board also decided to make editorial amendments to the implementation guidance accompanying AASB 1059.

Issue of Fatal-Flaw Review version of the Standard

     BC3               In June 2019, the Board issued a Fatal-Flaw Review version of the Standard for public comment. Submissions were received from four stakeholders. All respondents were supportive of the Board changing the modified retrospective method to measure the GORTO liability stated in paragraph C4(c) of AASB 1059 and providing a practical expedient to grantors of service concession arrangements to not apply AASB 16 to assets that would be recognised as service concession assets under AASB 1059.

     BC4               These respondents also provided feedback on additional issues in applying the modified retrospective method stated in paragraph C4 of AASB 1059 in relation to:

         * measurement of the financial liability set out in paragraph C4(b); and

         * measurement of the liability representing the unearned revenue arising from the receipt of additional consideration from the operator for access to an existing