Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p98
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 258630–261472

the asset for an alternative use.
BC109        Those stakeholders consider that those assets with implied restrictions would never be sold by the entity holding them because of the legal mandates applying generally to the not-for-profit public sector entity. Therefore, they consider that the entity can use those assets only for their current use. They argued that implied restrictions over the use of an asset should be treated as substantially the same as legal restrictions referred to in paragraph 28(b) of AASB 13 in identifying the highest and best use of the asset when measuring the asset's fair value.
BC110        The Board decided that the general principles in AASB 13, as described in paragraph BC104, are sufficient in determining the highest and best use of an asset subject to implied restrictions – that is, the highest and best use of an asset takes into account physical characteristics of the asset that market participants would take into account when pricing the asset, and legal restrictions on use that would be transferred to market participants in a hypothetical sale transaction. In addition, the Board noted that the strict criteria in paragraphs Aus29.1 and Aus29.2 for considering whether to measure an asset based on an alternative use to its current use should restrict the circumstances in which the fair value of an asset with implied restrictions would be measured based on an alternative use.

Public-sector-specific legal restrictions on prices that can be charged
BC111        Consistent with the Board's view noted in paragraph BC104, if legal restrictions imposed on the prices that a not-for-profit public sector entity may charge for using an asset not held primarily for its ability to generate net cash inflows would not be transferred to market participants, those restrictions would not be considered in fair value measurement of the asset. The Board observed that, in various cases, such legal restrictions on prices that can be charged are entity-specific restrictions (ie restrictions that are not expected to transfer to market participant buyers).
BC112        For example, a city council might provide car parking at below-market prices to provide enhanced access (and entice more visitors) to the city centre. Because a market participant buyer in a hypothetical sale of the city council's car park would not be restricted to providing car parking at below-market prices, it would price the city council's car park without regard to the discounts currently provided to patrons. Therefore, the fair value estimate of the car park should not be reduced (compared with the value determined for a for-profit entity) because of a self-imposed restriction to charge below-market prices for the use of car spaces.

When the current use of land and improvements on land might not be their highest