Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p47
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 47/91)
Character Range: 135274–138289

whether the 'conditions' of some transfers, for example, an endowment that must be used to provide an annual scholarship, could ever be said to be met.  Accordingly, the Board was not convinced that developing proposals based on AASB 120 would achieve its objectives in undertaking this project.

BC17            In addition, the Board discussed recent international developments for the recognition of income, and noted AASB 120 was less consistent with current conceptual thinking (compared to AASB 15) as it does not articulate the nature of obligations giving rise to a liability rather than income, or when these obligations can be said to have been satisfied.  The Board observed that the principles in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance had not been reconsidered fully at the time of issue of IFRS 15.  However, the IASB considered the approach in IAS 20 when developing the IFRS for SMEs Standard.  The IASB ultimately decided to adopt an approach that refers to the recognition of income when performance conditions are satisfied.  This approach may be considered to be similar to the IFRS 15 performance obligation approach.  Further, the Board observed that the IASB has no current plans to review IAS 20.  Having regard to the significance of grants, taxes, donations and similar transfers to the income of a not-for-profit entity, the Board decided to confirm again its 2004 decision not to extend AASB 120 to apply also to not-for-profit entities.

Based on AASB 15

BC18            The Board issued AASB 15 in December 2014, incorporating IFRS 15 Revenue from Contracts with Customers, and superseding AASB 118 and AASB 111 (among other pronouncements).  The AASB 15 revenue recognition model replaced the risk and rewards approach of AASB 118, introducing a performance obligation approach to the recognition of revenue.  The five-step model in AASB 15 focuses on:

(a)                    identifying the contract;

(b)                   identifying performance obligations;

(c)                    determining the transaction price;

(d)                   allocating the transaction price; and

(e)                    recognising revenue.

BC19            In the process of issuing AASB 15, the AASB decided that, consistent with AASB 118, AASB 15 should apply to not-for-profit entities as well as for-profit entities.  In this project, the AASB considered whether income from non-reciprocal transfers should continue to be treated differently from revenue from reciprocal transfers.  The Board concluded that, for any entity, a performance obligation (that is, a promise to transfer a good or a service to a customer in a contract) gives rise to a contract liability when the customer pays consideration for the good or service.  Consequently, the Board decided that the principles in AASB 15 on performance obligations should apply to any entity, whether for-profit or not-for-profit, in the private sector or public sector.

BC20            Overall,