Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p67
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 212596–215687

(paragraph B22).

     BC30            The Board decided that the circumstances noted in the preceding paragraph should form part of the application guidance to assist entities in assessing whether the service concession asset is controlled by the grantor.

     BC31            The Board deliberated whether long-term arrangements, privatisation and outsourcing arrangements should be scoped out of the requirements of the Standard, or whether they should be assessed to determine whether they meet the control criteria of paragraphs 5 or 6 of the Standard. The Board decided that where the arrangements meet the criteria of paragraphs 5 or 6, the arrangements should be accounted for as service concession arrangements. This approach would ensure the substance of an arrangement determines whether the arrangement is subject to this Standard.

Changes in control
     BC32            The Board considered whether the Application Guidance should require that where there is a change in facts and circumstances indicating the grantor's control of the asset may have changed, the arrangement should be reassessed to determine whether it is still within the scope of the Standard. The Board concluded that the Standard should include such Application Guidance, similar to existing requirements in AASB 16 and AASB Interpretation 4. The Application Guidance should also require that where the grantor no longer controls the asset, as specified in the Standard, the grantor assesses whether the asset should be recognised under another Accounting Standard.

Residual interest and whole-of-life assets
     BC33            The Board considered whether the Application Guidance should provide guidance on what constitutes a 'significant residual interest', including the determination of 'fair value' and its relationship with a 'whole-of-life' asset, in addressing whether the grantor controls a significant residual interest as set out in paragraph 5(b).

     BC34            The Board decided that:

          (a)                   what constitutes 'significant' varies from one entity to another and is a matter of judgement for the individual entity and not a decision for the Board. The judgement should be based on substance rather than form: for example, any residual interest is not necessarily a significant residual interest; and

          (b)                   the term 'significant' is used in numerous Standards without specific guidance as to what would constitute 'significant'. The Board did not consider specific guidance on the term would be appropriate in this Standard. If the Board were to provide guidance on the term, the Board may need to refer the matter to the IASB for consideration with reference to maintaining compliance with IFRS Standards. Consideration by the IASB on this issue would most likely have implications beyond service concession arrangements.

     BC35            This Standard requires the residual interest in the asset to be measured as the estimated fair value (current replacement cost) of the asset as if it were already of the age and in the