Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p23
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 60956–63939

uses for the purpose of the service concession arrangement, the grantor shall determine whether the asset meets the conditions in paragraph 5 (or paragraph 6 for a whole-of-life asset). If the conditions for recognition are met, the grantor shall recognise the asset as a service concession asset and account for it in accordance with this Standard.

Constructed or developed assets
     B44                When a constructed or developed asset meets the conditions in paragraph 5 (or paragraph 6 for a whole-of-life asset), the grantor shall recognise and measure the asset in accordance with this Standard. This recognition also depends on the asset meeting the recognition criteria in AASB 116 or AASB 138:
(a)                    AASB 116 requires that the cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
(i)                     it is probable that future economic benefits associated with the asset will flow to the entity; and
(ii)                   the cost of the item can be measured reliably;
(b)                   AASB 138 requires that an intangible asset shall be recognised if, and only if:
(i)                     it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
(ii)                   the cost of the asset can be measured reliably.
     B45                Those criteria, together with the terms and conditions of the contract, need to be considered by the grantor in determining whether to recognise the service concession asset during the period in which the asset is constructed or developed. For property, plant and equipment and intangible assets, if the recognition criteria are met during the construction or development period, the grantor recognises the service concession asset to the appropriate extent during that period.
     B46                The first recognition criterion requires the flow of economic benefits to the grantor. According to the Framework for the Preparation and Presentation of Financial Statements, as identified in AASB 1048 Interpretation of Standards, for not-for-profit entities, future economic benefits are synonymous with the notion of service potential. From the grantor's point of view, the primary purpose of a service concession asset is to provide service potential on behalf of the public sector grantor. Similar to an asset the grantor constructs or develops for its own use, the grantor would assess, at the time the costs of construction or development are incurred, the terms of the contract to determine whether, in addition to retaining control of the land on which the service concession asset is being developed, economic benefits embodied in the service concession asset are controlled by the grantor at that time.
     B47                The second recognition criterion requires that the cost of the asset can be measured reliably. Accordingly, to meet the recognition criteria in AASB