Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p56
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 180910–184279

goodwill, as service concession assets. Therefore the grantor initially:

          (a)                    reclassifies the property, plant and equipment as a service concession asset and recognises the asset at fair value (current replacement cost) (CU100), representing a revaluation surplus of CU40 over the carrying amount of CU60;

          (b)                   reclassifies the customer lists as an intangible service concession asset and recognises the asset at fair value (current replacement cost) (CU150) and a corresponding amount as revaluation surplus; and

          (c)                    recognises a liability under the grant of a right to the operator model for the additional consideration (CU300) provided by the operator.

     IE40              The journal entries for the accounting treatment set out in paragraph IE39 are:

                                           Debit  Credit

Year 1                                     CU     CU

Service concession asset – PPE             60
     Property, plant and equipment                60
Service concession asset – PPE             40
Service concession asset – Customer lists  150
     Revaluation surplus                          190
Cash                                       300
     Liability                                    300

Example 10:  Transition – measuring the liability under the grant of a right to the operator model at the date of initial application
     IE41              In accordance with the transition requirements set out in Appendix C of the Standard, a grantor may elect to apply the Standard retrospectively by recognising and measuring service concession assets and related liabilities at the date of initial application (paragraph C3(b)). The date of initial application is the beginning of the earliest reporting period for which comparative information is presented in the financial statements.

     IE42              This example illustrates the approach set out in paragraph C4(c) to measuring a liability under the grant of a right to the operator model at the date of initial application. The liability related to the grant of a right to the operator is required to be measured at the fair value (current replacement cost) of the related service concession asset at the date of initial application, adjusted (1) for any consideration transferred by the grantor to the operator that is recognised as an asset and (2) to reflect the remaining period of the service concession arrangement relative to the total period of the arrangement, (3) less any related financial liabilities.

     IE43              Assuming that the service concession arrangement in this example has not required any payments or other consideration from the grantor to the operator and does not give rise to a financial liability for the grantor, the information needed for measuring the liability is illustrated in the following table:

     Table 10  Estimates at the date of initial application
Parameter                                            Amount or period

Fair value (current replacement cost) of the         CU1,200
service concession asset
Total period of the arrangement                      20 years
Remaining service concession period                  10 years
Apportionment for the liability re grant of rights   CU1,200 x 10/20 = CU600
to the operator

     IE44