Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p32
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 85282–88235

in paragraph BC38(b)) that limiting the circumstances in which the current use presumption may be rebutted could result in some fair value measurements being non-compliant with IFRS 13 because they might delay the identification of a higher and better alternative use compared with application of paragraph 29 of IFRS 13 alone.
BC57            However, the Board considered that this potential for IFRS non-compliance should be insignificant. This is because the Board considers that a non-financial asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows:
(a)                    often is different in nature from an asset with similar features but held primarily for its ability to generate net cash inflows, because the nature of the benefits it provides is different;
(b)                   is subject to a different operational (public sector) environment that reduces the likelihood – compared with that of an asset held by a private sector entity – of realising a potential opportunity to be sold for a higher and better alternative use, and therefore reduces the relevance of such an opportunity to assumptions made by market participants when pricing the asset;
(c)                    if specialised, is unlikely to be used for another purpose, especially if the costs to convert the asset to an alternative use are high; and
(d)                   often is being used to provide necessary services to the public and, therefore, another not-for-profit public sector entity stepping into the shoes of the public sector entity holding the asset would base its pricing decisions on the asset's current use.
BC58            Even if particular fair value measurements under the proposed modifications to AASB 13 were considered not to be compliant with IFRS 13, the Board concluded they would be justified on cost-benefit grounds in accordance with paragraph 30(h) of the AASB Not-for-Profit Entity Standard-Setting Framework. The proposal regarding the identification of an asset's highest and best use is designed to reduce the cost and effort of a not-for-profit public sector entity searching unnecessarily for possible alternative uses of an asset.
BC59            Some Board members consider that if AASB 13 is modified to specify when the asset's current use ceases to be its highest and best use, doing so should drive more consistency between the asset's use and the asset's value reported on financial statements, rather than reporting the asset's value based on a possible alternative use. In addition, the proposal would not restrict the choice of valuation techniques to apply in measuring a not-for-profit public sector entity's asset.

Timing of when the current use presumption may be rebutted
BC60            Although the significant majority of ED respondents agreed with modifying AASB 13 to limit the circumstances in which the current use presumption may be rebutted, some ED