Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p69
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 217998–220951

over which an asset is expected to be available for use by an entity. An asset used in a service concession arrangement for its useful life (to the grantor) could have a significant residual interest at the end of the arrangement if the arrangement is not for all or the major part of its economic life. In this case, the condition in paragraph 5(b) would be relevant, and paragraph 6 is not applicable.

Upgrades or replacement of major components
     BC38            The Board extended the definition of 'service concession asset' to refer explicitly to upgrades and to replacements of major components of assets, whether of assets provided by the operator or existing assets of the grantor. The Board clarified that upgrades and major component replacements of service concession assets would be recognised by the grantor when the upgrade or replacement occurs, provided that the control criteria in paragraphs 5 or 6 were satisfied. The Board concluded that such upgrades and major component replacements are treated as service concession assets in their own right, and consequently the grantor also recognises a related liability in accordance with paragraph 11.

Intangible assets
     BC39            The Board considered whether the requirement in paragraph 8 that the grantor reclassify and measure an existing asset that is used in a service concession arrangement should apply to an identifiable intangible asset that has not been recognised previously by the grantor. The intangible asset would not have been recognised previously if the asset did not meet the criteria of AASB 138 Intangible Assets for recognition as an intangible asset. The Board decided that AASB 1059 should override AASB 138 and require a grantor to recognise and measure an existing but unrecognised identifiable intangible asset when the conditions in paragraph 5 or 6 for recognition as a service concession asset are met. This would apply even to intangible assets that are specifically precluded from recognition under paragraph 63 of AASB 138: internally generated brands, mastheads, publishing titles, customer lists and items similar in substance. The accounting for intangible assets of the grantor that are part of a service concession arrangement is set out in paragraphs B38–B39.

     BC40            The Board took the view that a service concession arrangement represents a transaction with an external party that identifies and values all identifiable assets involved in the arrangement. Therefore, with the exception of goodwill (see paragraph BC42), the accounting should be similar to that for business combinations under AASB 3 Business Combinations, in which all assets and liabilities acquired are recognised, including those not previously recognised by the acquiree. This approach means that intangible assets encompassed by a service concession arrangement should be recognised by the grantor as intangible service concession assets (when the