Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p51
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 130889–134030

Board also noted that the financial reporting thresholds for not-for-profit private sector entities may be revised as a result of the ACNC Legislative Review recommendations. It is possible that entities at the lower level of the reporting thresholds might not be required in future to apply the requirements of AASB 16 and AASB 1058. The temporary option would avoid such smaller entities incurring costs in measuring right‑of‑use assets at initial recognition at fair value when they might be exempted from this requirement in future by not being required to prepare financial statements that comply with Accounting Standards.

     BC8               However, as some not‑for‑profit entities had already commenced the process of determining the fair value of right‑of‑use assets in concessionary leases, the Board decided to make the temporary relief optional. This allows these entities to continue their work on fair valuing concessionary leases and applying the fair value initial recognition measurement requirements to measure right‑of‑use assets.

     BC9               Entities electing not to measure the right-of-use assets in concessionary leases at fair value will recognise the assets at cost in accordance with AASB 16 (paragraphs 23–25), which incorporates the amount of the initial measurement of the lease liability.

     BC10            The optional relief will be reassessed when further guidance has been developed to assist not‑for‑profit entities in fair valuing right-of-use assets and the financial reporting requirements for private sector not‑for‑profit entities have been finalised. The Board will consider whether to provide a permanent option for not‑for‑profit entities to measure a class of right‑of‑use assets at initial recognition either at cost or at fair value for those concessionary leases entered into prior to the application date of AASB 16 or for all concessionary leases.

Issue of ED 286 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities
     BC11            The Board's proposals were exposed for public comment in November 2018 through Exposure Draft ED 286 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities.

     BC12            The Board received feedback on its proposals through 20 submissions on ED 286. The responses to ED 286 indicated that:

          (a)                    all respondents agreed that not-for-profit entities should be given some form of relief to not measure right‑of‑use assets for concessionary leases at initial recognition at fair value. Some respondents agreed that the relief should only be given on a temporary basis until further guidance has been developed to assist not‑for‑profit entities in fair valuing right‑of‑use assets and the financial reporting requirements for not‑for‑profit private sector entities have been finalised. However, other respondents were of the view that the option to elect either cost or fair value measurement should be made available on a permanent basis for all concessionary leases and for not‑for‑profit entities in both the private