Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p81
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 249927–252957

subsequent measurement of a financial liability at fair value through profit or loss would not require separate accounting for a finance charge. The Board decided, given AASB 9 addresses the separate accounting for a finance charge, it is sufficient for AASB 1059 to refer to the financial instrument Standards in this respect without providing additional guidance;

          (c)                    whether to retain the guidance proposed in ED 261 relating to the appropriate interest rate for determining the finance charge (if any). The Board decided to replace the reference in ED 261 to determining the finance charge using the rate implicit in the arrangement. The Standard (paragraph B67) instead refers to determining the finance charge using the effective interest method when the financial liability is subsequently measured at amortised cost in accordance with AASB 9; and

          (d)                   whether to include guidance relating to the appropriate interest rate for initially measuring the financial liability component in a hybrid arrangement, since the financial liability component is measured first, and an interest rate is needed in order to discount the expected future cash flows to a present value. The Board decided to include application guidance (see paragraph B64) that the grantor shall, in the first instance, use the contractually specified interest rate in the arrangement to initially measure the financial liability component of a hybrid arrangement in accordance with AASB 9. If it is not practicable to determine the contractually specified interest rate, the grantor would determine the appropriate rate using the prevailing market rate(s) of interest for a similar instrument with a similar credit rating, following the requirements of AASB 9. Examples of rates for a similar instrument include the operator's cost of capital specific to the service concession asset, the grantor's incremental borrowing rate, or another rate appropriate to the terms and conditions of the arrangement.

Grant of a right to the operator (GORTO) model
     BC76            The GORTO model applies when the grantor grants the operator the right to earn revenue from third-party users of the service concession asset. Under the GORTO model, the grantor transfers to the operator an intangible asset (being a right to charge users of the service concession asset) in exchange for the construction, development, acquisition or upgrade of a service concession asset and the provision of related future services. The Board considered whether the grantor should initially recognise revenue or a liability when it obtains control of the service concession asset arising from a service concession arrangement. The Board noted that IPSAS 32 requires a grantor to initially recognise a liability when the grantor recognises the service concession asset. Given its policy of transaction neutrality, the Board considered whether the requirements of Australian Accounting Standards, specifically the application of