Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p65
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 168821–171736

costs and benefits
BC11 The Board concluded that it is appropriate to depart from its policy of transaction neutrality for assets within the scope of AASB 116 that are primarily held for their current service potential rather than to generate future net cash inflows for cost-benefit reasons.  This conclusion takes into account the extent and variety of long-lived assets held by public sector entities measured on the fair value basis and categorised within Level 3 in the fair value hierarchy.
BC12 As part of its considerations, the Board had regard to the benefits of the disclosures recognised by the International Accounting Standards Board (IASB) in its Basis for Conclusions to IFRS 13 Fair Value Measurement.  Having regard to its observations in paragraphs BC8-BC10, the Board considered that the relative costs of requiring not-for-profit public sector entities to disclose quantitative information about the significant unobservable inputs in fair value measurements of property, plant and equipment that are categorised within Level 3 in the fair value hierarchy, and the narrative description of the sensitivity of certain fair value measurements to changes in unobservable inputs, would generally be greater than they are for private sector entities.  At the same time, the benefits would not be as great having regard to the number of assets leading to a wide range of inputs within each class of assets for which disclosure is made and the information needs of users for such assets, particularly in the context of the very specialised nature and limited alternative use of the assets.  The Board similarly considered the costs of making the disclosure specified by paragraph 93(f) of AASB 13 to exceed the benefits to users of the disclosure, given the relative usefulness of the additional information to users of not-for-profit public sector general purpose financial statements.
BC13 As part of its consideration of the costs versus the benefits of presenting the disclosures specified by paragraphs 93(d), 93(f) and 93(h)(i) of AASB 13, the Board observed that many not-for-profit public sector entities had only recently applied AASB 13.  The Board discussed whether the concerns raised were reflective of underlying costs associated with implementing the Standard in a not-for-profit public sector environment, or whether the costs were largely transitional in nature.  For example, the Board noted that the requirement to disclose a narrative description of the sensitivity of certain fair value measurements to unobservable inputs was likely to be transitional as it did not appear to be well understood in practice despite an example of the disclosure being included in the Illustrative Examples accompanying IFRS 13.  The Board decided that the relative costs to not-for-profit public sector entities of presenting these disclosures were more than transitional in nature.
BC14 The Board