Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p48
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 145377–152712

outstanding financial liability. Because the amount of the predetermined payment related to the service component of the service concession arrangement is known, the grantor is able to determine the amount of the annual payment that reduces the liability each period. A finance charge at the effective interest rate of 6.18 per cent is recognised annually. The liability is subsequently measured at amortised cost, that is, the amount initially recognised plus the finance charge on that amount calculated using the effective interest method, minus repayments. The initial liability excludes the annual operating costs of CU12 and the compensation for the road resurfacing, as these components of the arrangement represent equally proportionately unperformed contracts.

     IE19              The compensation for the road resurfacing is included in the predetermined series of payments. There is no additional direct cash flow impact related to the road resurfacing beyond the predetermined payments; however, the grantor recognises the resurfacing as an asset when the work is undertaken and recognises depreciation expense of CU110/6 = CU18, beginning in year 9. When the resurfacing occurs, the grantor also recognises the related liability.

     IE20              The compensation for maintenance and operating the road (CU12) is also included in the predetermined series of payments. There is no additional cash flow impact related to this service expense beyond those payments; however, the grantor recognises an expense annually.

Overview of cash flows, statement of profit and loss and other comprehensive income, and statement of financial position
     IE21              The grantor's cash flows, statement of profit and loss and other comprehensive income, and statement of financial position over the duration of the arrangement will be as illustrated in Tables 6.1 to 6.3. In addition, Table 6.4 shows the changes in the financial liability.

        Table 6.1  Cash flows (currency units)

Year                               1   2   3      4       5       6       7       8       9       10      Total
Predetermined series of payments   –   –   (200)  (200)   (200)   (200)   (200)   (200)   (200)   (200)   (1,600)
Net inflow/(outflow)               –   –   (200)  (200)   (200)   (200)   (200)   (200)   (200)   (200)   (1,600)

     Table 6.2  Statement of profit and loss and other comprehensive income (currency units)
Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       1   2      3       4       5       6       7       8      9      10     Total
Service expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            –   –      (12)    (12)    (12)    (12)    (12)    (12)   (12)   (12)   (96)
Finance charge *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           –   (32)   (67)    (59)    (51)    (43)    (34)    (25)   (22)   (11)   (344)
Depreciation – base layers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 –   –      (39)    (39)    (39)    (39)    (39)    (39)   (39)   (39)   (312)
Depreciation – original surface layers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     –   –      (18)    (19)    (18)    (18)    (19)    (18)   –      –      (110)
Depreciation – replacement surface layers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  –   –      –       –       –       –       –       –      (18)   (19)   (37)
Total depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         –   –      (57)    (58)    (57)    (57)    (58)    (57)   (57)   (58)   (459)
Annual surplus/(deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   –   (32)   (136)   (129)   (120)