Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p99
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 261227–264074

reduced (compared with the value determined for a for-profit entity) because of a self-imposed restriction to charge below-market prices for the use of car spaces.

When the current use of land and improvements on land might not be their highest and best use
BC113        A group of stakeholders asked the Board to clarify whether, in relation to land and improvements of a not-for-profit public sector entity not held primarily to generate net cash inflows, the fair value of improvements on land should be measured at nil if it has been concluded that the highest and best use of the land used jointly with improvements is different from its current use (to provide services to the community) and the highest and best use assumes the existing improvements on the land would be demolished. The Board noted that:
(a)                    the IASB considered this issue in the context of for-profit entities when developing IFRS 13 (see paragraphs BC115 and BC116); however,
(b)                   the IFRS Interpretations Committee issued an Agenda Decision Valuation of biological assets using a residual method in March 2013. The Agenda Decision concerned biological assets that are physically attached to land, which have no separate market value and are measured at fair value using a residual method. The Committee noted that "IFRS 13 does not explicitly address the accounting implications if those circumstances arise and the fair value measurement of the asset based on its highest and best use assumes that other assets in the group need to be converted or destroyed." The Committee also noted that this issue might affect the accounting for assets in the scope of Standards other than IAS 41 Agriculture, and for these reasons decided not to undertake a project to address this issue; and
(c)                    this issue is not specific to not-for-profit entities.
BC114        Therefore, the Board decided not to develop implementation guidance on this issue. In addition, the Board noted that, since receiving the stakeholder group's request for guidance noted in paragraph BC113, the Board developed conditions in paragraphs Aus29.1 and Aus29.2 that must be satisfied before potentially identifying a higher and better use of a non-financial asset not held primarily for its ability to generate net cash inflows – specifically, in various circumstances, those conditions might nullify the premise of the question that the assets' current use is not their highest and best use. For an alternative feasible use of land and buildings currently used for a community purpose to potentially be identified as the highest and best use of those assets (thus potentially implying that the buildings have a fair value of nil), it would be necessary to meet the criteria in paragraphs Aus29.1 and Aus29.2 for considering whether an asset's current