Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p29
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 29/56)
Character Range: 339647–342522

way that predetermines how and for what purpose the asset will be used.

     BC34            Accordingly, the Board observed that AASB 16 could only apply to 'right to use' identified assets under contractual licences outside the scope of AASB 15, but that the term 'right to use' in the context of AASB 16, as outlined in the Application Guidance of that Standard, is used in a different context to the term 'right to use' when accounting for revenue from the issue of IP licences addressed in AASB 15.

     BC35            In this regard, the Board noted that it would expect most non-IP licences issued by NFP public sector licensors would not constitute 'right to use' identified asset type licences, and therefore would not fall within the scope of AASB 16 because:

          (a)                    in most cases there would not be an underlying licensor's asset involved in the arrangement (for example 'right to perform' type licences); or

          (b)                   where a licensor's asset is involved, it would be in the nature of 'a capacity portion of an asset that is not physically distinct' (a phrase used in AASB 16) and not an identified asset.

     BC36            In this regard, the Board noted that although a licence could satisfy the definition of a lease and therefore fall within the scope of AASB 16, after consultation with constituents it could only identify a limited number of examples (eg spectrum licences).

     BC37            The Board decided to amend the scope paragraph of AASB 16 to ensure the interaction of AASB 15 and 16 is clear.

AASB 1059 Service Concession Arrangements: Grantors
     BC38            AASB 1059 applies to service concession arrangements, and does not intend service concession arrangements be referred to as licences, on the basis that, in relation to a service concession arrangement "…the substance of the transaction appears more akin to financing the construction of the service concession asset, rather than a contract with a customer" (paragraph BC77 of AASB 1059).

     BC39            Given the approach in AASB 1059, the Board concluded that it would not be necessary to address any licences that meet the definition of service concession arrangements in this Standard as they are adequately dealt with in AASB 1059. The Board also concluded that, in the context of clarifying the accounting for revenue from licences issued by NFP public sector licensors, AASB 1059 should not be applied by analogy to licence arrangements that are not service concession arrangements.

AASB 1058 Income of Not-for-Profit Entities
     BC40            The Board concluded 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.