Finalisation of the ED 318 proposalsFinalisation of the ED 318 proposals

Finalisation of the ED 318 proposals

BC20 The Board received nine formal comment letters in response to ED 318. Following the consultation period, and after considering the comments received, the Board decided to proceed with issuing this Standard, with some changes from the proposals in ED 318.

Income of not-for-profit entities

BC21 The feedback received indicated that, whilst respondents to ED 318 did not raise concerns with the illustrated application of the recognition and measurement requirements in the proposed amendments to the illustrative examples in AASB 15, some of the respondents suggested that the proposed Illustrative Example 7A is too generic and recommended that any changes be dealt with as part of the forthcoming post-implementation review of the guidance for not-for-profit entities in AASB 15. The Board considered this feedback and noted that the example is intended to assist not-for-profit entities with limited resources in the application of AASB 15 requirements. The Board therefore decided to add the proposed Illustrative Example 7A to AASB 15, incorporating some editorial improvements suggested by the respondents.

BC22 Most respondents to ED 318 did not support the proposed amendment to AASB 1058 Illustrative Example 3, noting their concerns with the potential impact of the illustrated scenario and accounting analysis on current practice. A majority of the respondents indicated the amendments were not desirable at this time and recommended considering any amendments as part of the forthcoming post-implementation review of AASB 1058. After considering the feedback from stakeholders, the Board decided to retain Illustrative Example 3 in AASB 1058 without any amendment and to consider any changes as part of the post-implementation review.

Initial measurement of right-of-use assets arising under concessionary leases

BC23 Almost all respondents agreed with the Board’s decision to retain the accounting policy choice in AASB 16 paragraphs Aus25.1-Aus25.2 on an ongoing basis for not-for-profit private sector lessees to elect to initially measure a class of right-of-use assets arising under concessionary leases at cost or at fair value.

BC24 The Board noted that some feedback received disagreed with the decision to consider outcomes of the concessionary leases part of the IPSASB’s current Leases project and the Board’s proposals in Exposure Draft ED 320 Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities before reconsidering the application of fair value for concessionary leases in the not-for-profit public sector. The Board acknowledged stakeholders’ concerns regarding the difficulty of measuring the fair value of historical concessionary leases when developing the ED 318 proposals. The Board concluded that it is still appropriate to defer a decision about the initial measurement of right-of-use assets arising under concessionary leases for not-for-profit public sector lessees until additional guidance on how to measure the fair value of such right-of-use assets is discussed.

BC25 Accordingly, after considering the feedback to ED 318, the Board decided to proceed with the proposals in ED 318 to retain the accounting policy choice on an ongoing basis for not-for-profit private sector lessees and to defer consideration of the accounting policy choice for not-for-profit public sector lessees until the Board decides on any additional guidance for measuring the fair value of right-of-use assets under concessionary leases. This decision would be made after considering the outcomes of the concessionary leases part of the IPSASB’s current Leases project and the Board’s ED 320.

Effective date

BC26 The Board confirmed that the amendments would be effective for annual periods beginning on or after 1 July 2022, with earlier application permitted, as proposed in ED 318.