Deferral of fair value requirements for peppercorn leases approved by AASB
The decision by the Australian Accounting Standards Board (AASB) in November 2018 to defer the requirements for not-for-profit entities to fair value their right-of-use assets subject to peppercorn leases has now been officially approved.
AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities amends AASB 16 Leases, paragraph Aus25.1, to provide a choice to measure right-of-use assets subject to peppercorn leases at either cost or fair value. Because of the complexity involved in determining fair value for these right-of-use assets, we expect most not-for-profit lessees to adopt the ‘cost’ option when applying the new income recognition standard, AASB 1058 Income of Not-for-Profit Entities from 1 January 2019.
For more information on background to these amendments, please refer to our November 2018 and December 2018 Accounting News articles.