Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p40
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 40/56)
Character Range: 370304–373286

included providing guidance for applying the requirements to low-value licences, but not short-term licences (nor did the Board propose a definition of a 'short-term licence').  The majority of respondents to ED 283 supported the provision of practical expedients for short-term and low-value licences. However, several respondents requested the Board provide more guidance and examples on:

          (a)                    the meaning of 'short-term' (ie what is the time threshold) and 'low-value' (ie what is the monetary threshold and/or examples);

          (b)                   whether the exemption to apply to licences only when they satisfy both criteria (ie are both short-term and low-value); and

          (c)                    whether the exemptions are appropriate for some low-value licences that have a high volume of transactions, meaning the revenue is material.

Short-term licences
     BC77            In considering the issue raised in paragraph BC76(a), respondents explained that 'short-term' is used in a number of Standards inconsistently. For example, AASB 16 refers to a 'short-term lease' as a lease term of 12 months or less at the commencement date, AASB 119 Employee Benefits refers to employee benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period and AASB 107 Statement of Cash Flows refers to a maturity period of three months or less. The Board therefore decided that adding a practical expedient to AASB 15 for NFP public sector licensors without a definition could result in application issues and disparate accounting outcomes. Consequently, consistent with the decision to use the recognition exemptions in AASB 16 as a precedent, the Board decided to define 'short-term licences' as a licence that has a term of 12 months or less.

     BC78            The Board observed that, in accordance with AASB 16, the term of a lease would take into account a reasonably certain expectation that a lessee would exercise an option to extend or terminate the lease.  The Board considered whether this principle should be reflected in this Standard. The Board noted its expectation that an option typically would modify the scope, or the consideration for, the licence, and therefore would be accounted for as a new licence in accordance with paragraph Aus8.4. Nonetheless, for the removal of doubt and to simplify the recognition exemption, the Board decided to specify that an entity need not consider options to renew a licence in determining the lease term.

Low-value licences
     BC79            In considering the issue raised in paragraph BC76(a) the Board included examples of low-value licences in ED 283, including driver licences, marriage licences and working with children permits. The Board decided that it would not be appropriate for it to provide a more prescriptive list of examples, nor quantify when a licence would be of low-value, as