Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p60
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 156149–159294

leases at cost if they have already applied the fair value model to those lease assets under AASB 117 and would now measure the class of right‑of‑use assets at cost. Under paragraph C11 of AASB 16, entities can use the AASB 117 carrying amounts (fair value) as the basis for applying AASB 16 under the modified transition approach, without having to remeasure those amounts.

Basis for Conclusions on AASB 2022-3

This Basis for Conclusions accompanies, but is not part of, AASB 16.  The Basis for Conclusions was originally published with AASB 2022-3 Amendments to Australian Accounting Standards – Illustrative Examples for Not-for-Profit Entities accompanying AASB 15.

Introduction
     BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard. It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the bases for the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Reasons for issuing this Standard
     BC2               The Board considered comments from stakeholders in the not-for-profit sector following the implementation of AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-Profit Entities. Some stakeholders were concerned that the analysis and accounting treatment set out in the cash scholarship endowment example in Illustrative Example 3A accompanying AASB 1058 potentially was unclear and may lead to diversity in the recognition of financial liabilities.

     BC3               Stakeholders also noted concerns about the diversity of practice in accounting for upfront fees received by not-for-profit entities recognised as revenue within the scope of AASB 15.

     BC4               The Board noted feedback from not-for-profit private sector stakeholders that, despite having the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost under AASB 16 Leases as amended by AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities, uncertainty exists whether fair value information needs to be obtained for such right-of-use assets. (For ease of reference in this Basis for Conclusions, 'concessionary leases' refers to leases that have significantly below-market terms and conditions principally to enable the entity to further its objectives.)

     BC5               To address the feedback received, the Board proposed amendments to the illustrative examples in AASB 15 and AASB 1058. The Board also proposed to retain the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost on an ongoing basis, to provide certainty to not-for-profit private sector lessees.

     BC6               The Board decided to proceed with some of the proposed amendments, as set out in this Standard. This Basis for Conclusions sets out the due process followed and the Board's conclusions in determining the amendments to