Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p54
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 175053–178088

cash payments commence from year 3. Consequently, the effective interest rate for the financial liability is 3.2% per annum, reflecting this timing difference. The grantor's accounting policy for the financial liability is to subsequently measure the financial liability at amortised cost using the effective interest method;

          (c)                    the operator is permitted to collect tolls from drivers using the road for eighteen years (ie years 3–20);

          (d)                   the initial fair value (current replacement cost) of the construction cost of the service concession asset is CU1,800, once construction is complete at the end of the second year; and

          (e)                    at the end of year 20, the arrangement will end, and the operator will transfer the operation of the road to the grantor.

     IE32              The arrangement is within the scope of this Standard and the road meets the conditions for recognition as a service concession asset in paragraph 5 (or paragraph 6 for a whole-of-life asset).

Financial statement impact
     IE33              It is necessary to divide the grantor's consideration to the operator into two parts – the financial liability for the predetermined payments and the liability related to the grant of the right to the operator to charge tolls.

     IE34              The grantor recognises:

          (a)                    the service concession asset as property, plant and equipment at current replacement cost in accordance with the cost approach to fair value (current replacement cost) in AASB 13 totalling CU1,822 at the end of year 2, related to construction of the road (CU900 in both year 1 and year 2) and funding costs related to the financial liability recognised in year 1 (CU22 in year 2);

          (b)                   the total liability equal to the same amount as the current replacement cost of the service concession asset (total CU1,822). The total liability is allocated:

               (i)                     in year 1 – first to the financial liability measured at present value under AASB 9. In this example, the present value of the grantor's payments to the operator is CU673. Second, the remainder of the CU900 is allocated to the liability under the grant of the right to the operator model for the right to collect tolls (CU227);

               (ii)                   in year 2 – to the liability under the grant of the right to the operator model for the right to collect tolls (CU900) as the remainder of the liability related to the construction costs; and

               (iii)                 in year 2 – the borrowing costs of CU22 are allocated to the financial liability;

          (c)                    a finance charge expense (CU22) in year 2 relating to the financial liability in year 1, in accordance with the grantor's accounting policy; and

          (d)                   a revaluation surplus of CU22 to reflect the inclusion of funding costs relating to the construction period in the