Document ID: chunk:federal_register_of_legislation:F2022C00496:body:0:p18
Version: federal_register_of_legislation:F2022C00496
Segment Type: other
Provision Reference: 
Character Range: 44962–47982

the determining factor behind its manner of assessing any loss of service potential for inventories held for distribution.  The measurement requirement for inventories held for distribution would require each not-for-profit entity to identify the basis (or bases) for determining any loss of service potential that best suits the circumstances relating to the entity.  Different bases may apply to different inventories held for distribution within the same entity.
BC18 There was considerable support for the approach of requiring inventories held for distribution to be measured at cost, adjusted for any loss of service potential, in the submissions on Exposure Draft ED 154 Proposed Amendments to AASB 102 – Inventories Held for Distribution by Not-for-Profit Entities.  However, some submissions expressed concerns that the lower of cost and current replacement cost requirement is being applied without difficulty by many entities and argued that it might be unnecessarily disruptive to introduce the change proposed in ED 154.
BC19 The Board noted that a current replacement cost that is lower than cost might be a common way of identifying and measuring a loss of service potential for inventories held for distribution.  Accordingly, many entities are likely to continue their existing practices under a revised AASB 102, and the Board concluded few entities would be disrupted by the change.
BC20 The Board concluded that the requirement to measure inventories held for distribution at cost, adjusted when applicable for any loss of service potential, would give rise to more relevant information that better reflects the various accountabilities of not-for-profit entities.  In addition, the Board concluded that the requirement is likely to be more appropriate in practical terms than the former requirement in some circumstances.

Transition
BC21 The Board considered that, in some cases, measuring at the lower of cost and current replacement cost versus measuring at cost, adjusted when applicable for any loss of service potential, would give rise to different carrying amounts for inventories held for distribution.  The Board concluded that, on transition to the changed requirement, it is appropriate to require not-for-profit entities to adjust any difference prospectively against opening retained earnings and not amend comparative information on the basis that:
(a) there are likely to be practical problems associated with trying to retrospectively determine whether there have been further losses of service potential and precisely when they occurred, which may not be overcome by the impracticability override in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;
(b) the relatively short period of development involved in amending AASB 102 and, therefore, the absence of a long period during which constituents would be made aware of the changes; and
(c) requiring rather than permitting the prospective transitional approach is desirable from a comparability viewpoint.