The Department of Health has announced, via the Federal Budget and an information sheet entitled ‘improving choice in residential aged care’, that bed licences for aged care providers will no longer exist from 1 July 2024.
From an accounting perspective, aged care providers with bed licences recorded on the balance sheet will need to consider the appropriateness of the carrying amount via impairment and useful life.
|• The removal of bed licences is an impairment indicator.|
• Recoverable amount should be estimated using fair value or value of use for the cash generating unit (CGU) to which the bed licences belong.
• If the estimated future cash flows from the cash generating unit are less than the carrying amount of the assets in the CGU, the assets will need to be written down based on their carrying amounts.
|• Most aged care providers assign an indefinite life to their bed licences.
• The announcement that bed licences will not exist after 1 July 2024 means that the useful life assigned to the licences should not extend past this date.
• Amortisation should be recorded in the statement of profit and loss and other comprehensive income.
Further information and guidance from ASIC can be found in FAQ 9D here (external website).
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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.