Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p12
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 12/91)
Character Range: 39150–42256

may establish a contract between an entity and the estate that is within the scope of AASB 15 and give rise to a contract liability.

Provisions

Constructive obligations
B21                When an entity recognises an asset in accordance with another Australian Accounting Standard for consideration that is significantly less than fair value principally to enable the entity to further its objectives, the entity applies paragraph 9 to recognise any related amounts.  When applying that paragraph, an entity considers whether a provision should be recognised in accordance with AASB 137 for a constructive obligation.
B22                Critical to recognising a provision for a constructive obligation, an entity must demonstrate that its published policies, past practices or current statements are sufficiently specific to raise a valid expectation on the part of other parties that the entity will discharge its responsibilities under those policies, practices or statements.  Determining whether an entity's policies, practices or statements are sufficiently specific to create such an expectation among other parties is a matter of judgement.  However, it is unlikely that an entity's charter or stated objectives would satisfy the definition of a constructive obligation.
B23                An established pattern of past practices might also create a valid expectation among other parties that the entity will continue to adhere to those practices in the future.  While entities might establish a general pattern for utilising assets received, they often do not adhere to those patterns to such a degree as to create a valid expectation among other parties.

Legal obligations
B24                Contractual terms (implicit or explicit), legislation or another operation of the law might create a legal non-financial obligation for an entity.  In these circumstances an entity applies AASB 137 to recognise a provision, if any, arising from those legal obligations.
B25                Provisions might arise from terms included in a lease, such as an obligation to return or restore the leased asset in its original condition.  Paragraphs 24 and 25 of AASB 16 provide guidance on accounting for an obligation to maintain, or restore, assets to conditions specified in a lease.  Where such an obligation exists, the obligation is also accounted for in accordance with AASB 137.

Parliamentary appropriations as income
B26                The nature of parliamentary appropriations, and the circumstances that give rise to a government department's recognition of such appropriations, can vary across different jurisdictions in Australia, and may vary for different types of appropriations within a particular jurisdiction.  Similarly, the nature and content of appropriation legislation, the manner in which government departments' activities are funded, and the mechanisms by which parliament and the government ensure that the government departments' use of public funds is appropriate and consistent with government priorities as sanctioned by parliament, can change over time.  Accordingly, the