Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p24
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 64170–67066

approach, income approach or cost approach is used; and
(b)                   the costs associated with the provision of community service obligations are never more transparent than when a new public sector asset is valued at less than its cost of acquisition, and when the continuing use of a community asset is deemed not to be that asset's highest and best use. The public sector does not necessarily make investment decisions based on the concept of highest and best use. However, users of financial statements should be provided the opportunity to identify when this occurs.
BC29            In respect of the respondent's concerns noted in paragraph BC27(a), the Board observed that a precedent exists in the requirements of Australian Accounting Standards for not-for-profit entities to base the measurement of assets on whether they are held primarily to generate net cash inflows. AASB 136 Impairment of Assets does not apply to specialised assets of not-for-profit entities that are held for continuing use of their service capacity and not held primarily for their ability to generate net cash inflows if those assets are regularly revalued to fair value (AASB 136 paragraph Aus5.1). In relation to the respondent's comment – that uniform guidance on fair value measurement should be applicable to all reporting entities regardless of their sector – the AASB Not-for-Profit Entity Standard-Setting Framework sets out the circumstances in which not-for-profit or public-sector-specific modifications to IFRS Standards are justified. As discussed in paragraphs BC39–BC41, the Board considers that all decisions leading to the modifications to AASB 13 set out in this Standard complied with that Framework.
BC30            In respect of the respondent's comment about departures from the principles of IFRS 13, noted in paragraph BC27(b), the Board took into account the possibility of non-conformity with IFRS 13 in some fair value measurements, as explained in paragraphs BC37 and BC38. As noted in paragraphs BC39–BC41, the Board concluded that the particular features of the public sector – together with cost/benefit considerations – warrant that risk.
BC31            The Board observed that the notion of hypothetical not-for-profit public sector market participant buyers referred to in paragraph BC27(c) above is key to not measuring the fair values of many public sector entity assets at scrap value. This is supported by the IASB's Basis for Conclusions on IFRS 13, paragraph BC78, that "… In effect, the market participant buyer steps into the shoes of the entity that holds that specialised asset."
BC32            The IASB noted in paragraph BC79 of its Basis for Conclusions on IFRS 13 that sometimes an observed market price – one for sale on a stand-alone basis – will not reflect an asset's fair value (because it does not reflect the value that the asset contributes to