Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p19
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 19/32)
Character Range: 7239481–7242273

820‑635 The opening and closing balances method
820‑640 The 3 measurement days method
820‑645 The frequent measurement method

Special rules about values and valuation
820‑675 Amount to be expressed in Australian currency
820‑680 Valuation of assets, liabilities and equity capital
820‑682 Recognition of assets and liabilities—modifying application of accounting standards
820‑685 Valuation of debt capital
820‑690 Commissioner's power

How to calculate the average values

820‑630  Methods of calculating average values

Methods of calculation for entities that are not ADIs
 (1) An entity to which Subdivision 820‑B or 820‑C applies for a period that is all or a part of an income year must use one of the following methods to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application:
 (a) the method set out in section 820‑635 (the opening and closing balances method);
 (b) the method set out in section 820‑640 (the 3 measurement days method);
 (c) the method set out in section 820‑645 (the frequent measurement method).
Note 1: This subsection therefore applies only to an outward investing financial entity (non‑ADI) or an inward investing financial entity (non‑ADI).
Note 2: An entity cannot apply the 3 measurement days method if it is unable to meet the requirements in subsection 820‑640(1). An entity's ability to apply that method may therefore be limited.
 (2) The entity must use the same method to calculate all such average values for that period for the purposes of that application.

Commissioner's power
 (3) If the entity fails to comply with subsection (2), the Commissioner may, irrespective of the methods used by the entity, recalculate all the average values for the entity and that period by using the opening and closing balances method.

Method of calculation for ADIs
 (4) An entity to which Subdivision 820‑D or 820‑E applies for a period that is all or a part of an income year must use the frequent measurement method to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application.
Note: This subsection therefore applies only to an outward investing entity (ADI) or an inward investing entity (ADI).

820‑635  The opening and closing balances method
  An entity that uses the opening and closing balances method for a period must apply the following method statement to calculate the average value of a matter for that period.

           Method statement
           Step 1. Work out the value of the particular matter as at the first day of that period.
           Step 2. Work out the value of the particular matter as at the last day of that period.
           Step 3. Add the results of steps 1 and 2.
           Step 4. Divide the result of step 3 by 2.