Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p53
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
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Character Range: 136545–139750

is disclosed for users of financial statements to understand the effects on the financial position, financial performance and cash flows of the entity arising from concessionary leases.

     BC17            A number of ED 286 respondents expressed concerns that, without reference to fair value information, it might be difficult to assess whether a concessionary lease is material and therefore requires individual disclosures under AASB 16, paragraph Aus59.2.

     BC18            AASB 101 paragraph 7 defines when information is material and AASB Practice Statement 2 Making Materiality Judgements provides further guidance, including in relation to disclosure requirements. When making materiality judgements, an entity needs to take into account how information could reasonably be expected to influence the primary users of its financial statements when they make decisions on the basis of those statements. In respect of not‑for‑profit entities, primary users of financial statements are concerned with the ability of the entity to achieve its objectives. Therefore, when assessing whether a concessionary lease is material to the financial statements, the entity could consider factors such as the significance of the concessionary lease to the entity's operations in fulfilling its objectives.

     BC19            Some respondents recommended the Board consider clarifying the extent of disclosures required in AASB 16 paragraphs Aus59.1 and Aus59.2. Consistent with AASB Practice Statement 2, an entity applies judgement in determining the level of detail necessary to satisfy the disclosure objective, including the level of aggregation or disaggregation of disclosures so that useful information is not obscured. The Board notes that AASB 16 paragraph Aus59.2 requires disclosures to be made individually for each material lease and permits aggregated disclosures for other concessionary leases involving right‑of‑use assets of a similar nature.

GAAP/GFS convergence
     BC20            Several respondents commented that measuring right‑of‑use assets at either cost or fair value could result in Government Finance Statistics (GFS) convergence differences. As the ABS GFS Manual continues to distinguish operating leases and finance leases, some of these convergence differences relate to the underlying principles of AASB 16. However, a new convergence difference would arise if right‑of‑use assets under concessionary leases that would previously have been classified as finance leases are measured at cost under the temporary option, rather than at fair value. On balance, the Board considered that it was appropriate to provide not‑for‑profit entities with the temporary option in respect of such concessionary leases.

     BC21            Consequently, the Board added an exception to AASB 1049 (paragraph 13D) to permit public sector entities to measure right‑of‑use assets arising under concessionary leases at initial recognition at cost, rather than fair value.

Basis for Conclusions on AASB 2019-8

This Basis for Conclusions accompanies, but is not part of, AASB 16.  The Basis for Conclusions was originally published with AASB 2019-8 Amendments to Australian Accounting