Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p56
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
Provision Reference: 
Character Range: 144304–147172

ago), there were no internet cables underneath the site;
    * ten years ago, another entity installed internet cables with protective pipes under the site where Council B's building is located;
    * Council B determined that, if its building was to be replaced as at the measurement date of 30 June 20X2, the other entity's pipes that protect the internet cables would be disrupted;
    * the gross replacement cost necessary to restore those pipes disrupted during the hypothetical replacement of the components of Council B's building is $500,000; and
    * Council B is not part of a group of entities that prepares consolidated financial statements.
Restoration costs for disrupted assets of another entity
Since Council B determined that if its building was to be replaced as at 30 June 20X2, the other entity's pipes would be disrupted, when measuring the fair value of Council B's building under the cost approach in accordance with paragraphs F9(a) and F12(a), the reference building's gross replacement cost would include the $500,000 restoration cost for the pipes.
The restoration cost is included despite the fact that Council B did not incur those costs when it originally constructed the building. This is because fair value measurements consider the conditions of the asset as at the measurement date and, in its circumstances, Council B determined that the cost to a market participant buyer to acquire or construct a substitute building at the existing location would necessarily include those restoration costs. In addition, because Council B is not part of a group of entities that prepares consolidated financial statements, the 'same group' scope exclusion for such costs in paragraph F12(a) does not apply to Council B.

Example 3 – Whether to adjust the entity's own assumptions in measuring a non-financial asset
The Transport Department of a State Government (Department B) estimates the fair value of its railway tracks as at 30 June 20X1 using the cost approach. Department B determined that there are no observable market prices for completed suitable railway tracks, and not all other market participant data required to measure the fair value of railway tracks are observable.
The cost currently required to acquire or construct Department B's modern equivalent railway tracks would be 30% lower if they were manufactured overseas instead of in Australia. There is no legal requirement for the tracks to be manufactured in Australia. However, the Commonwealth Government provides significant funding assistance for both the public sector and the private sector to acquire or replace public transport assets. The policy is that at least 50% of federally co-funded asset acquisitions must be manufactured in Australia. The State Government controlling Department B has identified railway tracks as one of the asset types the replacement