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19 Jun. 2019

Fatal-Flaw Review Draft: Proposed Standard Amendments to Australian Accounting Standards –Implementation of AASB 1059

The AASB has issued a Fatal-Flaw Review Draft version of a proposed Standard that would amend AASB 1059 Service Concession Arrangements: Grantors and AASB 16 Leases to:

  1. change the modified retrospective method for measuring the Grant of a Right to the Operator (GORTO) liability set out in paragraph C4(c) of AASB 1059, so that the GORTO liability is initially measured based on the current replacement cost of the service concession asset at the date of initial application, adjusted to reflect the remaining concession period relative to the total period of the arrangement, rather than relative to the remaining economic life of the service concession asset;
  2. modify AASB 16 to provide a practical expedient to grantors of service concession arrangements so that AASB 16 would not need to be applied to assets previously recognised under AASB 117 Leases that would be classified as service concession assets in accordance with AASB 1059; and
  3. include editorial amendments to paragraphs IG10 and IG13 in the implementation guidance.

The Board decided to propose these amendments after considering transitional issues raised by some stakeholders in the public sector who are preparing for the implementation of AASB 1059.

The Fatal-Flaw Review Draft version of the proposed Standard AASB 2019-X Amendments to Australian Accounting Standards – Implementation of AASB 1059 is open for comment until Wednesday, 17 July 2019. The final amending Standard is expected to be released in August 2019.