Document ID: chunk:federal_register_of_legislation:F2022L00705:reg:5:p1
Version: federal_register_of_legislation:F2022L00705
Segment Type: reg
Provision Reference: reg 5 (pt 1/6)
Character Range: 12402–15652

5                        For legal purposes, this legislative instrument commences on 30 June 2022.

Basis for Conclusions

This Basis for Conclusions accompanies, but is not part of, AASB 2022-3 Amendments to Australian Accounting Standards – Illustrative Examples for Not-for-Profit Entities accompanying AASB 15.

Introduction
BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard. It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the bases for the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Reasons for issuing this Standard
BC2               The Board considered comments from stakeholders in the not-for-profit sector following the implementation of AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-Profit Entities. Some stakeholders were concerned that the analysis and accounting treatment set out in the cash scholarship endowment example in Illustrative Example 3A accompanying AASB 1058 potentially was unclear and may lead to diversity in the recognition of financial liabilities.
BC3               Stakeholders also noted concerns about the diversity of practice in accounting for upfront fees received by not-for-profit entities recognised as revenue within the scope of AASB 15.
BC4               The Board noted feedback from not-for-profit private sector stakeholders that, despite having the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost under AASB 16 Leases as amended by AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities, uncertainty exists whether fair value information needs to be obtained for such right-of-use assets. (For ease of reference in this Basis for Conclusions, 'concessionary leases' refers to leases that have significantly below-market terms and conditions principally to enable the entity to further its objectives.)
BC5               To address the feedback received, the Board proposed amendments to the illustrative examples in AASB 15 and AASB 1058. The Board also proposed to retain the accounting policy choice to initially measure right-of-use assets arising under concessionary leases at cost on an ongoing basis, to provide certainty to not-for-profit private sector lessees.
BC6               The Board decided to proceed with some of the proposed amendments, as set out in this Standard. This Basis for Conclusions sets out the due process followed and the Board's conclusions in determining the amendments to be included in the Standard.

Issue of ED 318 Illustrative Examples for Income of Not-for-Profit Entities and Right-of-Use Assets arising under Concessionary Leases

     BC7               The Board's proposals with respect to the amendments finalised in this Standard were exposed for public comment in January 2022 through Exposure Draft ED 318 Illustrative Examples for Income of Not-for-Profit Entities and Right-of-Use Assets arising under Concessionary Leases.

     BC8               The