Hello,
I have a question concerning IFRS 16 B24(b)(i).
A customer has the right to direct the use of an identified asset throughout the period of use only if either:
(a) the customer has the right to direct how and for what purpose the asset is used throughout the period of use (as described in paragraphs B25–B30); or
(b) the relevant decisions about how and for what purpose the asset is used are predetermined and:
(i) the customer has the right to operate the asset (or to direct others to operate the asset in a manner that it determines) throughout the period of use, without the supplier having the right to change those operating instructions; or
(ii) the customer designed the asset (or specific aspects of the asset) in a way that predetermines how and for what purpose the asset will be used throughout the period of use.
B24(b) states that the "decision about how and for what purpose the asset is used are predetermined". How then can the customer "direct others to operate the assset in a manner it determines"? Isn't the manner in which the asset is operated already predetermined by the contract?
Or is this about operating decisions, that are within the limits the contract has predetermined?
This is an academic question, but I think it can be illustrated very well with "IFRS 16 Illustrative Examples: Example 5"
I guess you also have access to it so I won't repeat everything said there. In the example, it does not specifically say, whether the customer has the right direct others to operate the asset, but let's assume this is the case. How and for what purpose the truck is used is already predetermined by the contract. The example then goes on to say, that the customer directs the use of the truck (speed, route, rest stops).
If the customer would hire a third party, to drive the truck, would the instructions about (rest stops etc.) then fulfill the criteria of "directing others to operate the asset in a manner that it determines"?
Maybe I'm also no entirely clear on what "operating an asset" means. Would it be just driving the truck or does operating an asset also include relevant decisions about things that are not predetermined in the contract. And what would happen, if everything would be predetermined in the contract, including rest stops etc. ?
If everything about the use of the truck was predetermined in the contract, I wouldn't understand, how the customer could then ask others to operate the truck in a manner it determines. But maybe this sitation then just would fulfill the criteria of IFRS 16 B24(b)(i).
Marek Muc wrote: ↑13 Feb 2024, 16:58
To me, operating a truck means driving a truck. Application of this criterion is also illustrated in Example 9—Contract for energy/power
Okay, thank you! But if the manner how the truck is operated i.e. driven is predetermined by the contract, how can the customer direct others to drive the truck in a manner it (the customer) determines?
