Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p59
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 153413–156367

consistent with the concept of a class of assets in other Standards, which looks only at the nature and use of the assets. However, the Board considered this would be a pragmatic and limited response to the issue for not-for-profit entities, and added paragraph Aus25.2 to AASB 16. The Board decided that this approach of treating sub-classes of assets as separate classes should not be applied by analogy in other circumstances.

Measuring some right‑of‑use assets arising under concessionary leases at cost and others at fair value

     BC18            Some stakeholders commented that some public sector entities have been measuring at fair value leased assets arising under finance leases pursuant to AASB 117 Leases, and expressed a desire to continue measuring at fair value right‑of‑use assets related to concessionary leases that were classified previously as finance leases, and measure right‑of‑use assets of other concessionary leases at cost. They questioned whether right‑of‑use assets related to concessionary finance leases can be considered a separate class of right‑of‑use assets.

     BC19            Even though electing measurement models based on the GFS categories of operating lease and finance lease could achieve better GFS alignment, the Board considered that this would conflict with the accounting measurement basis for leases, given the removal of the operating and finance lease distinction for lessees. AASB 1049 paragraph 13 does not require consistency with GFS in the event of a conflict. Permitting the election of cost or fair value measurement based on GFS categories would risk prioritising GFS alignment over faithful and comparable presentation of right‑of‑use assets in statements of financial position. Therefore, the Board considered that lessees' election of cost or fair value measurement should not be based on the superseded categories of finance lease and operating lease for lessees.

     BC20            However, the Board concluded that it would be appropriate to permit not-for-profit public sector entities to measure separate classes of right-of-use assets based on those arising from concessionary leases and those arising under other leases on different bases. That is, one of those classes could be measured at cost and the other at fair value, if the lessee applies the revaluation model to the class of property, plant and equipment to which the right-of-use assets relate. Thus a modification to paragraph 35, which does not refer to classes of right-of-use assets, is required, and so the Board added paragraph Aus35.1 to AASB 16.

     BC21            The Board noted that entities would not be required to remeasure right‑of‑use assets of existing concessionary finance leases at cost if they have already applied the fair value model to those lease assets under AASB 117 and would now measure the class of right‑of‑use assets at cost. Under paragraph C11 of AASB 16, entities can use the