Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p33
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 33/56)
Character Range: 350241–353189

price to performance obligations set out in Appendix F of AASB 15 [which arose from AASB 2016-8] should be applied.

     BC54            Paragraphs F28–F32 of Appendix F of AASB 15 set out implementation guidance for NFP entities in allocating a transaction price where NFP entities enter into transactions with a dual purpose of:

          (a)                    obtaining goods or services, which, in the context of this Standard, could be a licence element (accounted for under AASB 15); and

          (b)                   to help the NFP entity achieve its objectives, which, again in the context of this Standard, could be a tax element (accounted for under AASB 1058).

     BC55            Appendix F of AASB 15 requires the allocation be based on a rebuttable presumption that the transaction price is treated as wholly related to the transfer of promised goods or service (in the context of this Standard, the licence), where the rebuttal is premised on the arrangement being partially refundable in the event the entity does not deliver the promised goods or services (most commonly, a right to perform).

     BC56            The Board noted the views that:

          (a)                    if the price of a licence far exceeds the cost of the level of work required to satisfy the performance obligation, consistent with GFS accounting for licences (see paragraph BC24 above), the 'excess' over a reasonable price for the performance obligation may be a tax in certain circumstances; and

          (b)                   if an arrangement contains variable consideration (eg a sales-based or usage-based royalty to provide the licensor with additional revenue where the licensee makes a 'super-profit'), this component of the transaction price may be considered to be a tax in certain circumstances.

     BC57            The Board considered whether the GFS approach of accounting allocation between licence and tax revenue should be adopted (as previously discussed in paragraph BC25), and concluded that the guidance in paragraphs F28–F32 of Appendix F of AASB 15 is more appropriate .  The Board decided that distinguishing between a tax element, based on excess over a 'reasonable price' for the licence operating costs, would be too subjective (consistent with the Board's decision to not use the GFS definition of a licence also noted in paragraph BC25).

     BC58            Accordingly, the Board decided that a transaction price should only be allocated between a licence and a tax when the rebuttable presumption in paragraph F29 of Appendix F is met, and the licence fee is partially refundable in the event that the licence conditions are not satisfied, indicative that there is an element that is a tax component as it is not refundable. In that instance the licensor should apply the guidance in paragraphs F28–F32 to disaggregate the transaction price and account for the component that relates to the transfer of