FAQs-Matters discussed at the PSAF – Should a temporary change in use of an asset, as a result of COVID 19, impact on the classification of an asset?

Matters discussed at the PSAF – Should a temporary change in use of an asset, as a result of COVID 19, impact on the classification of an asset?

The PSAF considered whether a temporary, short-term change in use of an asset would impact an asset’s classification. For example, a stadium being used as a field hospital, or a building being used as a quarantine site.

Members discussed the following:

• Entities should assess how an asset is used over its entire useful life to determine an appropriate classification. The pre-COVID classification of assets may not be impacted where a change in use is temporary and short-term when compared to the entire useful life of an asset.
• An entity’s assessment and conclusions should be documented, and materiality should be considered when deciding what information should be disclosed in the financial statements.
• Revenue forgone as a result of the change in use is not recognised in the financial statements. The downturn in expected future cash flows resulting from the change in use of an asset may impact:
  • the impairment calculation, where there are indicators of impairment; and
  • the current value of assets measured at fair value.