Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p83
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 217499–220359

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 respondents disagreed that an entity's appropriate level of management having committed to a plan to sell the asset would, of itself, be sufficient to require an entity to reassess the asset's highest and best use (with a potential consequence that the asset's fair value would be remeasured). Those respondents argued that reassessing the asset's highest and best use should not occur until the asset has met the criteria for classification as 'held for sale' under AASB 5 and/or formal approval has been made to sell the asset or distribute it to owners.
BC61            They noted that, under the proposal in ED 320, when the asset subsequently meets the criteria for classification as 'held for sale' under AASB 5, another fair value estimate would need to be determined for the asset, and expressed concern that this outcome would cause undue cost and effort. They argued that, unlike for most assets held by for-profit entities, the sale of various assets held by not-for-profit public sector entities requires a complex and lengthy approval process (sometimes requiring legislative amendment) that can cause the elapse of a significant period between when an asset satisfies the 'committed-to plan to sell the asset' condition proposed in ED 320 and when the criteria for classification as 'held for sale' in AASB 5 are satisfied. For these reasons, they argued that applying the ED proposals would:
(a)                    give rise to a significant risk of premature (and additional) remeasurement because of the greater risk of changes in management plans stemming from the complexity of public sector processes for selling or redeploying assets;
(b)                   give rise to a significant risk of information leakage regarding sales of assets during a confidential tender process;
(c)                    obligate controlled entities to seek information about decisions by senior levels of government to which they might not be privy until sale of an asset becomes highly probable and/or imminent (ie when the criteria for classification as 'held for sale' are met). This is because, in the public sector environment, sometimes the plan to dispose of or redeploy an asset is initiated by a controlling entity of the holder of the asset, and the asset's holder does not learn of this plan until later (because the sale process for the asset is conducted confidentially for some time). Similarly, until an asset is ready for sale in the condition intended by an entity's appropriate