Re-estimation if balancing adjustment on partial disposal
(1) You also re-estimate a gain or loss from a * financial arrangement under subsection (2) if:
(a) the accruals method applies to the gain or loss; and
(b) a balancing adjustment is made in relation to the arrangement under Subdivision 230-G because you transfer to another entity:
(i) a proportionate share of all of your rights and/or obligations under the arrangement; or
(ii) a right or obligation that you have under the arrangement to a specifically identified * financial benefit; or
(iii) a proportionate share of a right or obligation that you have under the arrangement to a specifically identified financial benefit.
You must re-estimate the gain or loss as soon as reasonably practicable after the transfer occurs.
Nature of re-estimation
(2) Making a re-estimation in relation to a gain or loss under this subsection involves:
(a) a fresh determination of the amount of the gain or loss disregarding:
(i) * financial benefits; and
(ii) amounts of the gain or loss that have already been allocated to intervals ending before the re-estimation is made;
to the extent to which they are reasonably attributable to the proportionate share, or the right or obligation, referred to in paragraph (1)(b); and
(b) a reapplication of the accruals method to the redetermined gain or loss to make a fresh allocation of the part of that gain or loss that has not already been allocated to intervals ending before the re-estimation is made to intervals ending after the re-estimation is made.
Basis for re-estimation
(3) You make the fresh allocation of the gain or loss under subsection (2) by maintaining the rate of return being used and adjusting the amount to which you apply the rate of return to the present value of the estimated future cash flows discounted at the maintained rate of return. The object to be achieved by the fresh allocation is to allow you to bring the redetermined gain or loss properly to account over the remainder of the period over which you spread the gain or loss.
Table of sections
230-205 Objects of this Subdivision
230-210 Fair value election
230-215 Fair value election where differing income and accounting years
230-220 Financial arrangements to which fair value election applies
230-225 Financial arrangements to which election does not apply
230-230 Applying fair value method to gains and losses
230-235 Splitting financial arrangements into 2 financial arrangements
230-240 When election ceases to apply
230-245 Balancing adjustment if election ceases to apply