Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p79
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 207013–209908

about the highest and best use of non-financial assets referred to in paragraph BC44. These stakeholders do not consider the cost incurred to search for possible alternative uses of such an asset is justified when such an asset is very unlikely to be used for a purpose other than its current use, for the many cases in which the asset is:
(a)                    specialised, especially if the costs to convert the asset to the alternative use are high; and
(b)                   being used to provide necessary services to the public and, therefore, the public sector entity holding the asset is highly likely to continue using the asset to provide those services.
BC46            The Board considered the request and decided to modify AASB 13 to reduce the cost and effort of an entity searching unnecessarily for possible alternative uses of a not-for-profit public sector entity's non-financial asset not held primarily for its ability to generate net cash inflows. This is discussed in paragraphs BC49 to BC81.
BC47            In addition, stakeholders requested the Board to provide guidance assisting not-for-profit public sector entities to apply the three concepts specified in paragraph 28 of AASB 13 for identifying the highest and best use of non-financial assets not held primarily for their ability to generate net cash inflows (which has practical effect when the presumption that the asset's current use is its highest and best use is rebutted, after considering the circumstances in paragraphs Aus29.1 and Aus29.2 in which that might be the case). The Board decided that, in respect of such assets, implementation guidance is needed for the 'financially feasible use' concept in paragraph 28(c) of AASB 13, but implementation guidance is not needed regarding the application of the 'physically possible use' and 'legally permissible use' concepts in paragraphs 28(a) and 28(b). The Board's views on the 'physically possible use' and 'legally permissible use' concepts are set out in paragraphs BC96–BC112.
BC48            The Board concluded that, although the 'financially feasible use' concept should apply to fair value measurements of any non-financial asset, for an asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows, paragraph 28(c) of AASB 13 should be clarified in terms relevant to the not-for-profit public sector environment. Therefore, the Board added paragraph Aus28.1 in AASB 13. This is explained in paragraphs BC82–BC88.

The presumption that an asset's current use is its highest and best use (paragraphs Aus29.1 and Aus29.2)

Proposal in ED 320
BC49            The Board proposed in ED 320 that, for a non-financial asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows, the asset's current use – to provide particular public services – should