Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p38
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 38/91)
Character Range: 109998–112927

to develop the non-financial asset.

    Institute N therefore applies paragraph 9 and determines that it does not need to recognise related amounts of the following types:

                    a contribution by owners, as the grantor does not control or have an ownership interest in Institute N;

                    a contract with a customer within the scope of AASB 15 (as noted above);

                    a lease liability as defined in AASB 16, as the agreement does not provide a right to use a specified asset;

                    a financial liability within the scope of AASB 9, as there is no obligation to provide cash or another financial asset to other parties; and

                    a provision within the scope of AASB 137, as the agreement does not set out any constructive obligations – the refund obligation is recognised only in the event of a breach of the agreement or when a breach is expected.

    Accounting treatment

    In accordance with paragraph 10 of AASB 1058, Institute N recognises the grant as income when it obtains control of the funds.

    The journal entry for the initial recognition is:

      Debit Credit

     Cash  170,000

     Income  170,000

Volunteer services (paragraphs 18–22)

IE7                 Example 12 illustrates the requirements in AASB 1058 for recognising the receipt of volunteer services as income and as an asset or an expense.

    Example 12—Volunteer services

    A Local Government operates 35 preschools and employs 105 qualified educators to provide a quality education program for children.  The program operates five days per week for 40 weeks a year. Preschools are subject to an externally imposed staff-to-children ratio.  To satisfy the required ratio while employed staff take lunch breaks across a two-hour period, the Local Government obtains the services of volunteer qualified educators for the 35 preschools to relieve the employed staff for the two-hour period each day of the program.

    The Local Government assesses whether it meets the criteria in paragraph 18 (or 19) to require (or permit) the recognition of these volunteer services as income:

                    the fair value of the volunteer services received can be measured reliably by reference to the casual pay rates applicable to qualified educators.  The Local Government estimates the fair value of the volunteer services at $30 per hour and measures the fair value of the volunteer services received for the financial year as $420,000.  This is based on the calculation of $30 × 35 (relieving educators) × 2 (hours) × 5 (days) × 40 (weeks); and

                    the services would have been purchased if they had not been donated, in order to meet the staff-to-children ratio at all times.

    Accounting treatment

    As the Local Government meets the criteria in paragraph 18, it is required to recognise volunteer services income of $420,000.