Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p52
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 139318–142225

entity, another government or another not-for-profit public sector entity that would provide such services; and, in turn,
(b)                   there would not be another identifiable market participant for many assets held by not-for-profit public sector entities. Therefore, the market selling price of many such assets, or of identical assets, is unlikely to be directly observable.
BC122        The Board noted that paragraph 23 of AASB 13 states that an entity need not identify specific market participants, reflecting the focus of paragraph 22 of AASB 13 on the assumptions that market participants would use when pricing the asset. An entity estimates the pricing assumptions that other market participants (ie market participants other than the holder of the asset) would use by maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
BC123        The Board observed that many not-for-profit public sector entity assets not held primarily for their ability to generate net cash inflows are used in combination with other assets rather than on a stand-alone basis. As discussed in paragraphs BC54–BC55, the IASB noted in paragraphs BC78 and BC79 of its Basis for Conclusions on IFRS 13 that sometimes an observed market price – one for sale of an asset on a stand-alone basis – will not reflect an asset's fair value (because it does not reflect the value that the asset contributes to the entity, which is achieved by using the asset in combination with other assets). The IASB noted that fair value measurement for such an asset should assume that the market participant buyer steps into the shoes of the entity holding the subject asset.
BC124        Therefore, consistent with the IASB's view, the Board considered that when measuring the fair value of a non-financial asset of a not-for-profit public sector entity (the subject asset), market participants for the subject asset would include other not-for-profit public sector entities because they represent market participant buyers that hypothetically "step into the shoes" of the not-for-profit public sector entity holding the subject asset. That is, the entity considers the assumptions other not-for-profit public sector entities would use when pricing the subject asset. The Board observed that the majority of respondents to ED 320 who commented on this topic agreed with this view.

Developing unobservable inputs (paragraphs F3–F7)
BC125        In light of the stakeholder comment that many non-financial assets of not-for-profit public sector entities not held primarily for their ability to generate net cash inflows are unique to the holder of the asset and another identifiable market participant for the asset would be unlikely to exist (ie the entity would be unlikely to find observable inputs for measuring the fair value of such unique assets), the Board considered that the holder of