Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p30
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 30/56)
Character Range: 342287–345303

that AASB 1058 should not apply to accounting for revenue from licences within the scope of this Standard as it is a 'residual' income recognition standard and AASB 15 is more suitable as it is a 'primary' revenue recognition standard.

AASB 15 Revenue from Contracts with Customers
     BC41            AASB 15 applies to the accounting for revenue from contracts with customers, where the customer is a party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration. Paragraph 26(i) of AASB 15 explicitly identifies licences as a possible good or service. The Board notes that although paragraph B52 states that a licence establishes a customer's rights to the IP of an entity, and paragraphs B52 and B62 are written in the context of IP licences, paragraph 26(i)'s reference to 'licences' is not limited to IP licences.

     BC42            The Board observed that in assessing whether non-IP licences could fall within the scope of AASB 15, non-IP licence arrangements would need to:

          (a)                    constitute a contract with a customer;

          (b)                   constitute goods or services; and

          (c)                    be an output of the licensor's ordinary activities.

The scope of 'contract'
     BC43            The Board noted that AASB 15 applies only to licences resulting from a contract creating enforceable rights and obligations.  The Board noted however that the Framework for the Preparation and Presentation of Financial Statements (the Conceptual Framework) does not distinguish between rights and obligations created by contract and those created by statute.

     BC44            A key legal feature in distinguishing between rights and obligations created by contract versus those created under a statute is the assessment of whether the parties entered into the arrangement voluntarily. Arrangements imposed by statute (for example, taxation) are not contractual given that mutual voluntariness is lacking.  However not all relationships prescribed by statute are this conclusive.  The Board noted that for significant licences there is likely to be a specific contract put in place between the payer and payee that may operate in parallel with rights and obligations imposed by statute (eg gaming licences), however for other licences it is less clear whether they are contractual or statutory in nature.

     BC45            The Board noted that regardless of whether an arrangement or relationship in question arises from a contractual or statutory basis, that arrangement only needs to create enforceable rights and obligations between the relevant parties for it to be appropriately considered within AASB 15.  Provided that a NFP public sector licence is sufficiently enforceable, it should be within the scope of AASB 15. This is in line with the Board's previous decisions in Appendix F to AASB 15, which states in paragraph F13 that the enforceability