18 It is not considered appropriate to include all elements of the service concession arrangement in the measurement of the value of that asset. The grantor therefore should separate out the service and property elements. In situations where it is not possible to separate the contract due to commercial reality, then the service element of the payment must be estimated, which could be achieved by obtaining information from the operator or using the fair value approach. The fair value of the asset determines the amount to be recorded as an asset with an offsetting lease liability payable. The total unitary payment is then divided into repayment of the lease obligation, interest expense on the lease obligation (using the interest rate implicit in the lease), with the remainder deemed to relate to the service charge and expensed annually to the Operating Cost Statement.
19. A contract may be separable in a variety of circumstances, including but not limited to the following.
• The contract identifies an element of a payment stream that varies according to the availability of the property itself and another element that varies according to usage or performance of certain services.
• Different parts of the contract run for different periods or can be terminated separately. For example, an individual service element can be terminated without affecting the continuation of the rest of the contract.
• Different parts of the contract can be renegotiated separately. For example, a service element is market tested and some or all of the cost increases or reductions are passed on to the purchaser in such a way that the part of the payment by the purchaser that relates specifically to that service can be identified.