Document ID: chunk:federal_register_of_legislation:F2022C01152:reg:4:p24
Version: federal_register_of_legislation:F2022C01152
Segment Type: reg
Provision Reference: reg 4 (pt 24/63)
Character Range: 81423–84651

for example, performing a sensitivity analysis to determine the effect of changes in the significant assumptions or the data used in making the accounting estimate.

A46.         The requirements of the applicable financial reporting framework may specify the approach to selecting management's point estimate from the reasonably possible measurement outcomes. Financial reporting frameworks may recognise that the appropriate amount is one that is appropriately selected from the reasonably possible measurement outcomes and, in some cases, may indicate that the most relevant amount may be in the central part of that range.

A47.         For example, with respect to fair value estimates, AASB 13[39] indicates that, if multiple valuation techniques are used to measure fair value, the results (i.e., respective indications of fair value) shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances. In other cases, the applicable financial reporting framework may specify the use of a probability‑weighted average of the reasonably possible measurement outcomes, or of the measurement amount that is most likely or that is more likely than not.

A48.         The applicable financial reporting framework may prescribe disclosures or disclosure objectives related to accounting estimates, and some entities may choose to disclose additional information. These disclosures or disclosure objectives may address, for example:

           * The method of estimation used, including any applicable model and the basis for its selection.

           * Information that has been obtained from models, or from other calculations used to determine estimates recognised or disclosed in the financial report, including information relating to the underlying data and assumptions used in those models, such as:

                   + Assumptions developed internally; or

                   + Data, such as interest rates, that are affected by factors outside the control of the entity.

           * The effect of any changes to the method of estimation from the prior period.

           * The sources of estimation uncertainty.

           * Fair value information.

           * Information about sensitivity analyses derived from financial models that demonstrates that management has considered alternative assumptions.

A49.         In some cases, the applicable financial reporting framework may require specific disclosures regarding estimation uncertainty, for example:

           * The disclosure of information about the assumptions made about the future and other major sources of estimation uncertainty that give rise to a higher likelihood or magnitude of material adjustment to the carrying amounts of assets and liabilities after the period end. Such requirements may be described using terms such as "Key Sources of Estimation Uncertainty" or "Critical Accounting Estimates". They may relate to accounting estimates that require management's most difficult, subjective or complex judgements. Such judgements may be more subjective and complex, and accordingly