Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p52
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 133781–136829

been finalised. However, other respondents were of the view that the option to elect either cost or fair value measurement should be made available on a permanent basis for all concessionary leases and for not‑for‑profit entities in both the private sector and the public sector; and

          (b)                   most respondents agreed that the proposed additional disclosure requirements in AASB 16 would provide adequate information for users of the financial statements to understand the effects on the financial position, financial performance and cash flows of the entity arising from concessionary leases in the absence of fair value information. However, some respondents suggested providing further clarification to ensure not‑for‑profit entities understand the disclosure requirements.

     BC13            The Board considered the feedback and in December 2018 decided to finalise its decisions to provide a temporary option for not‑for‑profit entities to elect to measure a class of right‑of‑use assets arising under concessionary leases at cost or at fair value at initial recognition. At a later time, when fair value measurement guidance has been developed and the not‑for‑profit private sector financial reporting requirements have been finalised, the Board will consider whether the temporary option should be made permanent.

Election of measurement basis
     BC14            Some ED 286 respondents noted that there might be instances where an entity may wish to apply the option of not fair valuing right-of-use assets for concessionary leases only to some, but not all, of the right-of-use assets. This may be the case for example where the not‑for‑profit entity has elected to apply the revaluation model under AASB 116 Property, Plant and Equipment to a class of property, plant and equipment and would therefore likely elect to measure right‑of‑use assets that relate to that class also at fair value, as permitted by AASB 16, paragraph 35. However, this should not force the entity to also measure all other right-of-use assets arising from concessionary leases on initial recognition at fair value.

     BC15            Consequently, the Board decided that the election of the measurement basis for initial recognition of right‑of‑use assets of concessionary leases should be made by class of right‑of‑use assets. As specified in other Standards, a class is a grouping of assets of a similar nature and use in an entity's operations.

Disclosures
     BC16            In the absence of fair value information, the Board decided that entities electing to measure a class of right‑of‑use assets at initial recognition at cost rather than at fair value would need to make additional disclosures. This will ensure adequate information is disclosed for users of financial statements to understand the effects on the financial position, financial performance and cash flows of the entity arising from concessionary leases.

     BC17            A number of ED 286 respondents expressed concerns that, without reference to