Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p92
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 280391–283527

control of a service concession asset, including guidance on:

               (i)                     when the grantor would control the service concession asset in an environment where the services provided and/or the service pricing is regulated by a third-party regulator;

               (ii)                   the need to assess whether long-term leases, outsourcing or privatisation arrangements are within the scope of this Standard; and

               (iii)                 changes in the grantor's control of the service concession asset; and

          (b)                   the relationship between the residual interest of the asset at the end of the service concession arrangement and a whole-of-life asset.

     BC115        This Standard requires the grantor to initially measure the service concession asset at current replacement cost in accordance with the cost approach to fair value in AASB 13. IPSAS 32 instead specifies measurement of fair value generally – there is no IPSAS corresponding to AASB 13.

     BC116        This Standard requires an existing asset of the grantor, including a previously unrecognised identifiable intangible asset or land under roads, that is reclassified as a service concession asset to be measured at fair value (current replacement cost) at the date of reclassification. IPSAS 32 does not permit such measurement or the recognition of previously unrecognised identifiable intangible assets or land under roads.

Recognition and measurement of liabilities
     BC117        This Standard requires the grantor to recognise a financial liability when the grantor has a contractual obligation to pay cash to the operator for third-party usage of a service concession asset, with or without guaranteeing a minimum amount to the operator. IPSAS 32 refers to such an arrangement as a 'shadow toll' arrangement and requires the grantor to account for the payments as an expense when paid instead of recognising a financial liability at the commencement of the service concession arrangement.

     BC118        This Standard references the application of the financial instrument Standards to a financial liability, while IPSAS 32 explicitly requires the grantor to allocate the payments to the operator under the contract as a reduction in the liability recognised, a finance charge and charges for services. Additionally, IPSAS 32 provides guidance that the finance charge is determined based on the operator's cost of capital specific to the service concession asset, if this is practicable to determine. If this is not practicable, the rate implicit in the arrangement, the grantor's incremental borrowing rate, or another rate appropriate to the terms and conditions of the arrangement is used. In contrast, this Standard provides guidance that the grantor uses the contractually specified interest rate in the arrangement to initially measure the financial liability component for the purpose of dividing a hybrid arrangement. Where this is not practicable, prevailing market rate(s) of interest for a similar instrument with similar credit ratings are applied, as required by the