Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p46
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 46/56)
Character Range: 386288–389353

of non-IP licences would be addressed by the practical expedients for short-term and low-value licences. Further, the Board noted that the disagreement with the application of AASB 15 (noted in paragraph BC84) related primarily to casino and gaming licences. The Board observed that the prevalence and magnitude of such types of licences did not require specific treatment, in accordance with The AASB's Not-for-Profit Entity Standard-Setting Framework. The Board made this assessment at the jurisdictional level, observing that casino and gaming licences typically are issued by treasuries or departments of finance, with administering agencies accounting for such licences as administered items. In light of this the Board decided that the underlying principles of AASB 15 are appropriate for the recognition of revenue from non-IP licences, and it did not find a justifiable reason to diverge from its policy on transaction neutrality.

Variable consideration
     BC97            The Board considered whether the general principles in AASB 15 paragraphs 50–59 should be amended to reflect, for non-IP licences, the guidance for sales-based or usage-based royalties within paragraph B63 of AASB 15 for IP licences. The Board noted this guidance might make it easier for licensors to determine the transaction price and timing of revenue recognition of non-IP licensing arrangements involving sales-based or usage-based consideration. However, in ED 283, the Board decided to use the general guidance in AASB 15 to be consistent with the overall decision as part of option 2 (see the table in paragraph BC73 above). The Board also decided to ask constituents a specific question within ED 283 on whether AASB 15 paragraph B63 should be used instead of the general guidance in AASB 15 to account for sales-based or usage-based consideration for non-IP licences.

     BC98            Feedback from respondents on this question was mixed. A number of respondents supported the Board taking a transaction neutral approach to accounting for variable consideration (ie applying the general requirements in AASB 15). However many of these respondents also noted they did not issue licences that involved variable consideration. In contrast, some respondents that do issue licences with variable consideration noted the practical difficulties in applying the general requirements in AASB 15 (such as estimating the consideration and the significant adjustments that would be required) and therefore preferred applying the specific requirements in paragraphs B63–B63B for variable consideration of IP licences.

     BC99            However, the Board observed that difficulties in estimating variable consideration was only brought to the Board's attention in the context of long-term licences, such as casino licences. As noted in paragraph BC4, the Board observed that the quantitative magnitude of this type of licence is not of significant materiality. Additionally, outreach with users of NFP public sector financial statements confirmed that the variable component