Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p57
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 148020–151021

of Government and General Government Sector financial statements. Other public sector entities, such as government agencies and local governments, are not subject to AASB 1049 and are not required by current Accounting Standards to adopt a fair-value approach in measuring non‑financial assets. These entities therefore do not need the temporary relief provided under AASB 1049. Whether these entities are required to adopt a fair-value approach is a matter for the Treasury or Finance Department or other authority in each jurisdiction.

     BC13            Consistent with its decisions in AASB 2018-8 (see paragraph BC16 of AASB 2018-8), the Board considers that the additional disclosure requirements in paragraphs Aus59.1 and Aus59.2 of AASB 16 apply in the absence of fair value information at any reporting date when right-of-use assets arising under concessionary leases are measured at cost, subsequent to their initial recognition at cost. This ensures adequate information is disclosed for users of financial statements to understand the effects on the financial position, financial performance and cash flows of the entity arising from concessionary leases.

Class of right‑of‑use assets
     BC14            Current accounting standards (eg AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets) describe a class of assets as 'a grouping of assets of a similar nature and use in an entity's operations'. Some stakeholders commented that applying this description – grouping right‑of‑use assets of a similar nature and use in an entity's operations – would mean that a right‑of‑use asset arising under a concessionary lease would be classified in the same class as right‑of‑use assets arising under other leases, if they exhibit the similar nature and use. Therefore, further guidance or amendments would be required to define or clarify 'a class (or classes) of right‑of‑use assets' if it was intended to provide temporary relief to not‑for‑profit entities by permitting them to elect to measure right‑of‑use assets arising under concessionary leases at cost or fair value, whether or not right‑of‑use assets arising under other leases that are in the same class are measured on the same basis.

     BC15            The Board considered that the amendments made to paragraph Aus25.1 of AASB 16 and the commentary in paragraph BC14 to AASB 2018-8 already distinguished a class of right‑of‑use assets based on whether the right‑of‑use assets arise under concessionary or non-concessionary leases, in addition to the requirement for a similar asset nature and use. Given the uncertainty whether the current measurement option is effective given the existing description of a class of asset, the Board 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