Document ID: chunk:federal_register_of_legislation:F2022L00705:reg:5:p4
Version: federal_register_of_legislation:F2022L00705
Segment Type: reg
Provision Reference: reg 5 (pt 4/6)
Character Range: 21053–24220

not have the knowledge and experience in applying the principles of AASB 13 Fair Value Measurement because they generally do not measure non-financial assets at fair value. The cost and effort required to understand and apply AASB 13 requirements for the one-off purpose of initially recognising a right-of-use asset under a concessionary lease might be considered unjustified;
          (b)                   some stakeholders have commented that the disclosures required by AASB 16, including the requirements in AASB 16 paragraphs Aus59.1─Aus59.2, appear to provide sufficient information to users of financial statements about concessionary leases for them to understand the effects of the leases on the financial position, financial performance and cash flows of the entity, in the absence of fair value information; and
          (c)                    some stakeholders have commented that recognising income resulting from initially measuring such right-of-use assets at fair value, and the subsequent amortisation of the right-of-use assets, might not meet the information needs of users of financial statements. This might particularly be the case when a user is more interested in the entity's expenses that need to be funded rather than the value of an asset consumed during the financial period that would not need to be funded.
BC16            Therefore, having regard to the AASB Not-for-Profit Entity Standard-Setting Framework, the Board decided to propose retaining the accounting policy choice in AASB 16 paragraphs Aus25.1–Aus25.2 on an ongoing basis (ie with no plan to reconsider the accounting policy choice) for not-for-profit private sector lessees to elect to initially measure a class of concessionary right-of-use assets at cost or fair value.

Not-for-profit public sector lessees
BC17            Regarding not-for-profit public sector lessees, the Board considered that a decision about the initial measurement of right-of-use assets arising under concessionary leases should be deferred until additional guidance on how to measure the fair value of such right-of-use assets is discussed.
BC18            The Board decided to consider outcomes of the concessionary leases part of the IPSASB's current Leases project and the Board's Exposure Draft proposing modifications to AASB 13 for not-for-profit public sector entities before reconsidering the application of fair value for concessionary leases in the not-for-profit public sector.
BC19            The Board noted concerns raised by public sector stakeholders regarding the difficulty of measuring the fair value of historical concessionary leases. However, the Board decided not to propose grandfathering concessionary leases currently in place from a possible future fair value requirement at this time but to consider grandfathering if in the future it considers removing the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost.

Finalisation of the ED 318 proposals
BC20            The Board received nine formal comment letters in response to ED 318. Following the consultation period, and after considering the comments