Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p106
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 279817–282735

holder of the asset subject to measurement (the subject asset) is readily identifiable, and on identifying the entity likely to be the highest bidder for the subject asset in a hypothetical sale.
BC137        The Board made this decision after considering comments received from stakeholders in targeted outreach that many non-financial assets of not-for-profit public sector entities not held primarily for their ability to generate net cash inflows are not sold regularly and may not have identifiable market participants other than the holder of the asset. Two main concerns were raised by stakeholders regarding the approach described in paragraph BC136, namely that:
(a)                    some assets might have multiple market participants, and requiring an entity to identify the likely highest bidder for an asset would impose greater costs in preparing and auditing financial statements; and
(b)                   it would be difficult to apply the concept of a hypothetical highest bidder for assets that are unlikely to be sold (eg because of a Government directive preventing an entity from selling the asset).
BC138        The Board concluded that re-expressing the requirements of paragraph 89 of AASB 13 in the manner described in paragraphs F5–F7 would address these two key concerns raised by stakeholders.

Assumed location of an asset when applying the cost approach (paragraph F11(a))
BC139        This issue relates to an asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows and measured under the cost approach (eg a public school or public hospital). This issue mainly concerns the fair value measurement of real property.
BC140        The Board was asked to clarify whether the location of the real property being valued should necessarily be the property's existing location, particularly in view of the principle that an asset's current replacement cost reflects replacement in the most economical manner. For example, if a facility could deliver its services equally well in a nearby location with cheaper land, the Board was asked whether it be assumed that "the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility" (as referred to in paragraph B9 of AASB 13) reflects the price of the facility in the cheaper location.
BC141        For the reasons described in paragraph BC155, a fair value estimate is based on an assumed hypothetical exchange transaction by considering data about a reference asset. Some stakeholders argued that the facility's fair value estimate should reflect the price of suitable property in a cheaper feasible location (the arguably suitable reference property) because a market participant buyer would not be willing to pay for an asset at a more expensive location, if the facility could deliver its services equally well in a nearby location with cheaper