Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p58
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 150749–153644

decided to clarify this in the further amendment of AASB 16.

Options for addressing the issues

     BC16            The Board considered three possible options for resolving the issues:

         * Option 1 – permit the election of the measurement basis for right‑of‑use assets on a lease-by-lease basis. This option would reduce comparability between not-for-profit entities and amongst assets of an entity. The Board considered there is a risk that entities might choose a measurement method for the purpose of achieving a particular outcome;

         * Option 2 – introduce a definition of 'class of right‑of‑use assets' to clarify that concessionary leases may have a different nature and use in the entity's operations compared with other leases. The Board was of the view that the definition created would not be consistent with the concept of a class of assets in other Standards, which looks only at the nature and use of the assets in an entity's operations. AASB 16 paragraphs 53(a) and (j) require disclosure of the depreciation charge and the carrying amount for right‑of‑use assets by class of underlying asset, this will be less meaningful when the disclosures aggregate amounts for different right‑of‑use asset classes measured on different bases. The Board also considered that developing a new definition might require further guidance to be developed to assist preparers in applying the new definition; and

         * Option 3 – specify that right‑of‑use assets arising under concessionary leases may be treated as a separate class of right‑of‑use assets from right‑of‑use assets arising under other leases. As with Option 2, this option would not be consistent with the concept of a class of assets in other Standards, which looks only at the nature and use of the assets and aggregated right‑of‑use asset disclosures under AASB 16 may be less meaningful.

     BC17            The Board considered the advantages and disadvantages of each option and decided to adopt Option 3 – specify that right‑of‑use assets of not-for-profit entities arising under concessionary leases may be treated as a separate class of right‑of‑use assets from right‑of‑use assets arising under other leases. This option is expected to be the simplest to apply without limiting the scope of the exemption from the requirements to measure right‑of‑use assets at fair value in advance of public sector not‑for‑profit entity guidance on applying fair value. The Board noted specifying that right‑of‑use assets arising under concessionary leases can be treated as a separate class of right‑of‑use assets from right‑of‑use assets arising under other leases would not be consistent with the concept of a class of assets in other Standards, which looks only at the nature and use of the assets. However, the Board considered this would be a pragmatic and limited response to the issue for not-for-profit