Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p85
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 85/91)
Character Range: 240213–243214

absence of developing Australian specific amendments to AASB 1, it is unclear how a lease within the scope of AASB 1058 should be treated in the financial statements of a first-time adopter of Australian Accounting Standards.

BC160        The Board considered whether the general features of the exemptions available for lease assets and lease liabilities in AASB 1 should apply also to leases with significantly below-market terms and conditions at inception.  The Board noted if it did so, assets acquired through such leases could remain understated in a first-time adopter's financial statements.  The Board considered this reduced comparability between a not-for-profit first-time adopter and a not-for-profit entity that is already applying Australian Accounting Standards.  Accordingly, the Board decided not to extend this exemption to leases for which the initial recognition and measurement is specified by AASB 1058.  However, the Board considered that some measure of transitional relief is necessary, and decided a first-time adopter should have access to similar relief in this regard as an entity already applying Australian Accounting Standards.

Effective date

BC161        The Board considered feedback it received from several constituents requesting the Board defer the effective date of AASB 1058 (and related pronouncements) beyond 1 January 2018.  The Board discussed the effective date of AASB 1058 (and AASB 2016-8, also issued as part of this project), noting its intention had been to align the effective date of any pronouncements resulting from this project with the effective date of AASB 15.  The Board was concerned that an effective date of 1 January 2018 could disadvantage not-for-profit entities compared to for-profit entities applying AASB 15, as not-for-profit entities would have significantly less lead time before implementation of AASB 1058.  The Board considered that the transitional provisions may not provide sufficient relief to entities in this regard.

BC162        In addition, the Board considered whether to similarly defer the application date of AASB 15 for not-for-profit entities.  The Board discussed the interaction between AASB 15, AASB 1004 and AASB 1058 should the application date of AASB 15 differ from that of AASB 1058, including:

(a)                    whether the scope of AASB 1004 should take precedence over AASB 15 for affected entities.  (that is, transaction types subject to AASB 1004 would continue to be subject to that Standard, until such time as AASB 1058 became effective); and

(b)                   the effect on comparability for transactions that may be accounted for in accordance with AASB 1004 by not-for-profit entities but in accordance with AASB 15 by for-profit entities.

BC163        The Board considered that it would be preferable for the effective date of AASB 1058, AASB 2016-8 and AASB 15 to be aligned for application by not-for-profit entities, rather than adopt a stepped approach to adopting the