Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p79
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 244604–247451

relating to the recognition of a financial liability and, consistent with the key principles of IPSAS 32, decided that a financial liability should be recognised when the grantor has a contractual obligation to deliver cash or another financial asset to the operator.

     BC72            A financial liability arises when the grantor is obligated to make a determinable payment or series of payments to the operator. The Board agreed with the IPSASB conclusion that when there is a determinable payment or series of payments of cash or cash equivalents, the payments should be allocated as a reduction of the liability, an imputed finance charge (if any), and charges for services provided by the operator under the service concession arrangement. The Board determined that wherever possible the existing guidance in AASB 9 Financial Instruments should apply.

     BC73            The Board considered whether a financial liability arises when an arrangement requires the grantor to make payments to the operator based on third-party usage of the service concession asset without guaranteeing a minimum amount to the operator. The Board considered the application of the financial liability model to this case by assessing the notion that the grantor may not have a contractual obligation to pay the operator specified or determinable amounts at the inception of the arrangement as specified in paragraph 15. As noted in paragraph B63, the grantor has a financial liability if it does not have an unconditional ability to avoid the obligation to make the payments to the operator. The grantor is not able to avoid the payments as it cannot control the usage of the service concession asset by third parties, and any attempt to restrict usage may result in penalties under the arrangement. The amounts payable by the grantor to the operator are contingent upon the level of third-party usage of the service concession asset. Paragraph 25 of AASB 132 Financial Instruments: Presentation affirms this view that a grantor may have a contractual obligation in the form of a financial liability when the amounts are not specified or determinable at inception but are contingent on the occurrence or non-occurrence of uncertain future events. The Board also decided that AASB 9 should be applied to the accounting for the financial liability subsequent to its initial recognition. Accordingly, the Board decided that, for the arrangement under consideration, the financial liability model should be applied (as set out in paragraph 16(a)), with the financial liability initially recognised at the same amount as the fair value of the service concession asset, and the grantor applying AASB 9 subsequently to the accounting for the financial liability. The Board noted this view is consistent with its decision to not include in ED 261 or AASB 1059 the