Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p36
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 36/56)
Character Range: 358283–361192

various examples of licences
     BC65            In ED 283 the Board considered whether the specific guidance for private sector IP licences in paragraphs B52–B63B of AASB 15 could be easily applied by analogy to examples of non-IP licences (that both involve a licensor's assets and that involve a right to perform an activity). The Board noted that application of those paragraphs to IP licences appears relatively straight-forward because IP licences issued by NFP public sector licensors appear to align with those IP licences issued by for-profit entities. However, in relation to non-IP licences, the Board observed application of many of the requirements was more challenging. Challenges were particularly notable where the licence did not involve an asset of the licensor. In particular:

          (a)                    many of the requirements (eg AASB 15 paragraphs B58–B59A, which are used to determine whether an IP licence transfers over time) require an assessment of whether the licensor's activities significantly affect the IP (ie the underlying asset); and

          (b)                   in the case of some NFP public sector non-IP licences, the licensor may conduct a number of actions throughout the licence period, such as monitoring licensees and their activities under their licences. However, the actions are performed more generally in the public interest. It is not clear whether these activities are undertaken to significantly affect the licensee's rights granted by the licence. The specific guidance in Appendix B of AASB 15 for IP licences does not explicitly address this matter as it is not written from a NFP public sector perspective.

     BC66            Despite the guidance for IP licences appearing easier to apply to licences involving assets of the licensor that are not leases, the Board was unable to identify licences of this type. This is because, in most cases, non-IP licences that involve an asset of the licensor (but are not leases) are not distinct from other goods or services that the entity provides (ie in accordance with the requirements in paragraphs 26–30 and paragraph B54 of AASB 15). Accordingly these types of arrangements would be accounted for as a bundle of goods or services in accordance with paragraph 30.

     BC67            For example, the Board considered the following two examples of licensing arrangements involving an asset of the licensor that are not leases.

Example: fibre-optic cable
     BC68            The Board considered whether the right to utilise a specified capacity within a fibre-optic cable connecting two cities was an example of a licence that provides a licensee a right to access or use a licensor's asset. The scenario considered was based on Implementation Example 3 – Fibre-optic cable from IFRS 16 Leases (which was determined not to be a lease as it is not an identified asset), where a customer is