Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p42
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 112914–115915

market participant buyers would be prepared to pay for the subject asset. The Board considers that, if a not-for-profit market participant buyer would be willing to pay more for an asset, if necessary, than the amount reflecting the net cash inflows the asset could generate (which might occur if the subject asset (e.g. a specialised asset) is not available in the market for a price reflecting its cash-generating ability), measuring the asset at that higher amount would not introduce non-financial influences into the concept of financial feasibility. In such a case, hypothetical market participant buyers would be willing to pay a cash price for the asset exceeding the amount on which a commercial return may be generated, because of non-commercial benefits they can derive. If the subject asset is not available in the market for a price reflecting its cash-generating ability, and in the circumstances that asset is measured using the cost approach based on acquisition for its highest and best use (including deductions for any obsolescence), its fair value measurement would not involve non-financial influences, because paragraph B9 of AASB 13 stipulates that current replacement cost does not exceed the amount for which a market participant buyer could replace the asset's service capacity.
BC86            In response to the stakeholder's question noted in paragraph BC84(b), the Board observes that the modifications to AASB 13 set out in this Standard, including the modification of the guidance on 'financially feasible use' in paragraph Aus28.1, do not indicate that the income approach cannot be applied when measuring the fair value of a non-financial asset of a not-for-profit public sector entity not held primarily for its ability to generate net cash inflows. The entity uses judgement in determining which valuation technique (or combination of techniques) to apply, considering all facts and circumstances and the availability of observable inputs relevant to the subject asset.
BC87            The stakeholder also requested the Board to provide illustrative examples of how to apply paragraph Aus28.1, including where the asset does, or does not, have the potential to derive income. The Board declined that request because:
(a)                    paragraph Aus28.1 proposes a simple amendment to replace:
(i)                     assessing whether an asset's use would generate an investment return on an investment in that asset, with
(ii)                   assessing whether market participants would be willing to invest in the asset's service capacity. This would be largely dependent on whether the asset provides essential (or highly desired) goods or services to beneficiaries of either the entity or a similar not-for-profit public sector market participant buyer hypothetically bidding for the asset, which typically would be the case for assets within the scope of this Amending Standard;
(b)                   the illustrative examples on IFRS 13 do not include