Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p55
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 177821–181220

(CU22) in year 2 relating to the financial liability in year 1, in accordance with the grantor's accounting policy; and

          (d)                   a revaluation surplus of CU22 to reflect the inclusion of funding costs relating to the construction period in the current replacement cost of the service concession asset.

     IE35              The journal entries for the accounting treatment set out in paragraph IE34 are:

                                Debit  Credit

End of year 1                   CU     CU

Service concession asset – PPE  900
     Financial liability               673
     Liability                         227
End of year 2

Service concession asset – PPE  922
     Liability                         900
     Revaluation surplus               22
Finance charge                  22
     Financial liability               22

Example 9:  Initial recognition of intangible assets in a business
     IE36              Example 9 illustrates the requirements in paragraphs B14 and B39(a) for the initial recognition of the assets of a business that is subject to a service concession arrangement, including identifiable intangible assets.

Arrangement terms
     IE37              The relevant terms of the arrangement in the example are:

          (a)                    a grantor enters into an arrangement that involves an operator providing public services related to a business, on behalf of the grantor. The business is a business as defined in AASB 3 Business Combinations, with customer lists and property, plant and equipment. The customer lists are intangible assets as they would meet the separability criterion in AASB 3. They were developed and are owned by the grantor;
          (b)                   the initial fair value (current replacement cost) of the business and the identifiable assets of the business are set out in Table 9;
          (c)                    the operator has the right to collect revenue in relation to updating the customer lists; and
          (d)                   at the commencement of the arrangement, the operator provides the grantor with cash consideration of CU300.

     Table 9  Fair values of the components of the arrangement (currency units)
Contract component             Carrying amount  Fair value
Business                       n/a              300
Property, plant and equipment  60               100
Customer lists                 –                150

     IE38              The arrangement is within the scope of this Standard and, as existing assets of the grantor, the property, plant and equipment and customer lists meet the conditions for a service concession asset in paragraph 5 (or paragraph 6 for a whole-of-life asset).

Financial statement impact
     IE39              The grantor has not previously recognised the customer lists as an intangible asset as they are precluded from recognition as an intangible asset under AASB 138. As a result of entering into the service concession arrangement, the grantor recognises the assets of the business, excluding any internally generated goodwill, as service concession assets. Therefore the grantor initially:

          (a)                    reclassifies the property, plant and equipment as a service concession asset and recognises the asset at fair value (current replacement cost) (CU100), representing a revaluation surplus of CU40 over the