Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p37
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 37/56)
Character Range: 360969–363771

or use a licensor's asset. The scenario considered was based on Implementation Example 3 – Fibre-optic cable from IFRS 16 Leases (which was determined not to be a lease as it is not an identified asset), where a customer is provided with specified capacity equivalent to them having the use of three fibre strands within a cable. In that example, the supplier makes decisions about the transmission of data (eg lights the fibres, makes decisions about which fibres are used to direct the customer's traffic and makes decisions about the electronic equipment that it owns and connects to the fibres). The Board concluded that the nature and extent of activities performed by the supplier meant that the supplier is effectively transmitting data for the customer. Therefore, the supplier is providing the customer with a service and the customer can benefit from the licence only in conjunction with that related service. Therefore, in accordance with paragraph 30, the licence is combined with the other goods or services and accounted for as a bundle of goods or services that is a single performance obligation.

Example: abalone/fish
     BC69            The Board considered whether two examples of fishing licences were examples where the licensor grants the licensee rights over the licensor's assets (the first one was a commercial licence to fish for abalone and the other a recreational fishing licence). In these examples, the bodies of water and the fish are arguably assets of the licensor, which the licensee has the right to access or use.

     BC70            In these examples, the licensee has the ability to take or attempt to take abalone/fish (up to a maximum quota in the case of abalone). However, when examined, the Board concluded that abalone/fish are tangible goods and the licence is an inextricable part of those tangible goods and is therefore not distinct (refer paragraphs 26–30). Therefore, in accordance with paragraph 30, the licence is combined with the other goods or services and accounted for as a bundle of goods or services that is a single performance obligation

     BC71            The Board also observed that despite an arrangement being referred to as a licence, it might be in substance a 'take or pay' arrangement, and should be accounted for in accordance with the principles of AASB 15, with consideration of paragraphs B44–B47, which address customers' unexercised rights. An example of this would be where a NFP public sector licensor issues a 'licence' that requires the licensee to pay for a specified quota of a good, regardless of whether or not the licensee subsequently chooses or manages to take the specified quota.

     BC72            The Board asked a specific question in ED 283 to understand whether there were any examples of distinct