Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p61
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 163564–166403

use different data. In addition, the Board decided to provide a practical expedient in paragraph F14 whereby an entity need not undertake exhaustive efforts to obtain information about the costs referred to in paragraph BC148, provided that the entity includes all such costs for which data are reasonably available.
BC152        The Board also considered the feedback that identifying an asset's current replacement cost as including the costs referred to in paragraph BC148 might require an entity to recognise and measure separately some assets at a considerably more disaggregated level, resulting in increased cost and effort. For example, concerns were expressed that greater disaggregation might become necessary for costs to restore assets of other entities disturbed upon replacement of the subject asset, because those restoration costs would vary considerably according to location-specific factors. The Board observed that the implementation guidance on the application of the cost approach does not preclude the use of unit rates or standard costing methodologies that approximate the total amounts of individual assets, particularly in applying the concept of materiality. Similarly, the implementation guidance does not mandate the unit of account for assets measured at fair value by applying the cost approach.

The overarching principle
BC153        The definition of fair value in paragraph 9 of AASB 13 refers to the price that would be received to sell an asset (ie exit price). However, when the best evidence of a subject asset's fair value (maximising the use of relevant observable inputs) is not data about that asset's selling price or net cash inflows from use (and therefore the cost approach is applied), the asset's fair value is derived by regard to the asset's market buying price (often the sum of a number of purchase prices for the asset's parts). In relation to applying the cost approach, paragraph B9 of AASB 13 states that: "From the perspective of a market participant seller, the price that would be received for the asset is based on the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. That is because a market participant buyer would not pay more for an asset than the amount for which it could replace the service capacity of that asset."
BC154        In this regard, the price a market participant buyer would be prepared to pay for a subject asset is estimated by reflecting the fact that the market participant buyer presently does not possess the subject asset and needs to acquire or construct it in its entirety. The Board concluded that, to estimate this amount, an entity would include all necessary costs intrinsically linked to acquiring or constructing the asset at the measurement date. This is because