Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p66
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 209852–212896

asset for the majority of its economic life. This mirrors the control concept in AASB Interpretation 12. The Board noted that a broader concept of control currently applies in other Accounting Standards and that an asset that does not meet the control definition of this Standard may still need to be recognised under other Accounting Standards. The Board decided to include application guidance to make explicit the requirement to apply the broader concept of control.

Regulation
     BC29            In developing the Application Guidance for the control concept, the Board formed the view that there are three main circumstances in which a grantor controls or regulates the price, the services and/or to whom the services must be provided in accordance with paragraph 5(a). The three main circumstances are where the service concession contract:

          (a)                   specifies that the grantor controls or regulates the price, the services and/or to whom the services must be provided;

          (b)                   specifies that a third-party regulator regulates the price, the services and/or to whom the services must be provided – under this circumstance, the regulation by the third-party regulator removes the ability of the operator to set or regulate the price, the services and/or to whom the services must be provided and the regulation is considered to be set implicitly by the grantor. Additionally, it is not essential for the grantor to direct the activities of the third-party regulator for the grantor to have control over the service concession arrangements (paragraph B20); and

          (c)                   does not specify that a third-party regulator regulates the price, the services and/or to whom the services must be provided – under these circumstances, many governments have the power to regulate the behaviour of entities operating in certain sectors of the economy, either directly or through specifically created agencies. For the purpose of paragraph 5(a), such broad regulatory powers do not constitute control without a specific arrangement or contract (paragraph B21). Instead the grantor, operating under such a regulatory framework, derives control of the service concession asset either from the contract or the specific regulation applicable to the industry or service. However, where a service concession arrangement does not clearly fall within an existing regulatory framework (eg where there is more than one possible source of regulation), the arrangement will need to incorporate the specific regulatory framework that stipulates the services, the users and/or the pricing to be charged for the services in order for the grantor to have control of the service concession asset (paragraph B22).

     BC30            The Board decided that the circumstances noted in the preceding paragraph should form part of the application guidance to assist entities in assessing whether the service concession asset is controlled by the grantor.

     BC31            The Board deliberated