Document ID: chunk:federal_register_of_legislation:F2022C00554:body:0:p83
Version: federal_register_of_legislation:F2022C00554
Segment Type: other
Provision Reference: 
Character Range: 255421–258543

its remaining performance obligation to provide access.

     BC79            The Board decided that facts and circumstances would need to be assessed for each arrangement to determine whether the arrangement represented a right-of-access licence or a right-of-use licence. The Board preferred all service concession arrangements to be treated the same way, as it did not see the substance of service concession arrangements being different in respect to commitments under the arrangements. The Board also noted that recognising revenue immediately on a service concession asset that would otherwise be considered loss making from a cashflow perspective would not reflect the economic substance of the arrangement and would overstate current year financial performance. The Board further noted that immediate recognition of revenue (rather than a liability) would result in overstatement of the financial position as the requirement to use current replacement cost as fair value recognises the asset in full, even though the right to charge users of the asset has been transferred to the operator.

     BC80            Consequently, the Board concluded the grantor's promises to undertake activities in relation to the service concession asset that will benefit the operator should also be accounted similarly to a contract liability. The grantor would subsequently recognise revenue as the 'access' is provided to the operator over the service concession period.

     BC81            In some service concession arrangements, the right to charge users is described as a licence. The Board noted that accounting for licences other than those relating to service concession arrangements should be subject to further research to inform the Board as to whether a separate project would be required. Determining whether a particular licence granted by a government is within the scope of AASB 15 would depend on the facts and circumstances.

     BC82            Given the importance of service concession arrangements to governments and the lack of accounting guidance for such arrangements in the absence of AASB 1059, the Board decided that service concession arrangements should be treated separately from other licences granted by governments.

     BC83            The Board considered whether the Standard should include additional guidance on the principle-based approach to recognising revenue under the GORTO model. The Standard (paragraph 22) specifies that the grantor recognises revenue and reduces the GORTO liability according to the economic substance of the arrangement. The Board assessed the following options of whether to:

(a)                    require revenue to be recognised on a systematic and rational basis using the straight-line method. This option would eliminate divergent approaches to recognising revenue but would not be consistent with the objective of the Board to develop a principle-based accounting standard; or

(b)                   not provide additional guidance in the final Standard on the basis there is sufficient guidance in the Standard. Paragraph B71 requires revenue to be