Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p8
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 20063–23190

those assumptions to the extent that reasonably available information indicates that other market participants would use different data.

     F12                 When applying paragraphs F9(a) and F11, the entity shall, subject to paragraph F14, include the following costs (among other costs) in the reference asset's replacement cost if they are judged to be necessarily incurred in the hypothetical acquisition or construction of the reference asset at the measurement date:

          (a)                    costs required to restore another entity's asset, if the asset that would need restoration existed at the measurement date and would be disturbed in a hypothetical acquisition or construction of the reference asset. However, such costs are excluded if they relate to restoration of an asset of another entity included in the consolidated group (if any) to which the entity belongs;

          (b)                   other disruption costs that would hypothetically be incurred when acquiring or constructing the reference asset at the measurement date (eg costs of redirecting traffic when replacement of the reference asset, such as a drainage pipe, disrupts the operation of a road); and

          (c)                    if the subject asset is fixed to a parcel of land, site preparation costs for the reference parcel of land on which the reference asset would hypothetically be constructed, unless those site preparation costs are reflected (explicitly or implicitly) in the fair value measurement of the subject parcel of land.

     F13                 For the purposes of paragraph F12(c), site preparation costs include, but are not limited to:

          (a)                    costs required to prepare the land (eg earthworks) for the hypothetical construction of the reference asset; and

          (b)                   costs required to remove and dispose of any unwanted existing structures on the land to make way for the hypothetical construction of the reference asset.

     F14                 An entity applies judgement in determining which costs would necessarily be incurred in the hypothetical acquisition or construction of a reference asset with the same service capacity and condition as the subject asset at the measurement date. An entity need not undertake exhaustive efforts to obtain information about the costs referred to in paragraphs F12 and F13. However, an entity shall include all such costs for which data are reasonably available.

     F15                 When applying the cost approach in accordance with paragraph F9(a) to measure the fair value of a heritage asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows, to the extent that its heritage features are an essential part of its service capacity, the replacement cost of the reference asset generally means the cost of replicating the heritage and other features of the subject asset (ie reproduction cost). Replication would assume reconstruction using modern cost-effective materials and processes, but sympathetic with the original heritage design and