Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p50
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 50/91)
Character Range: 143651–146701

constituents considered to be a 'fatal flaw' with the pronouncements.  The Board received seven formal submissions, and also obtained feedback via various presentations and meetings held with other constituents and with Panel members.

Finalisation of ED 260

BC28            Following the consultation period, and after considering constituent comments received, the Board decided to proceed with issuing revised principles for the recognition and measurement of income of not-for-profit entities largely as exposed.  The Board considered the identified benefits of the revised requirements to exceed the costs of the revised requirements.

BC29            The Board observed some of the costs of the new requirements to be:

(a)                    costs of changing systems and processes to reflect the revised requirements;

(b)                   costs of reviewing the terms of existing contracts, funding agreements and similar to determine the impact on transition.  The Board observed that it expects the operation of the transitional provisions to largely negate these costs;

(c)                    increased costs associated with the requirement to measure more assets at fair value (or current replacement cost, in relation to inventories) at initial recognition.  The Board observed that while the consequential amendments made by this Standard will require more assets to be recognised and measured at fair value, these requirements better reflect the value transferred to the entity.  The Board noted this Standard does not require assets (including assets obtained in a 'peppercorn' lease where a nominal amount is made as payment to the lessor) to be measured at fair value on an ongoing basis, but only on initial recognition (or in some instances, on transition to this Standard).  Further, the Standard does not require the valuations to be conducted by a professional valuation expert.  In addition, the Board noted the Standard does not require assets in the form of donated inventory to be recognised and measured at current replacement cost where the item donated is not material;

(d)                   increased costs associated with the requirement to separately identify components not related to a transfer of goods or services.  In response, the Board has limited the instances in which an entity is required to separately account for such components in a contract with a customer, and only requires the accounting to be applied where the component is material;

(e)                    increased costs associated with identifying whether transactions are contracts with customers within the scope of AASB 15, or to be accounted for in accordance with this Standard.  The Board noted it had added further guidance on enforceability and further illustrative examples to the Standard to assist entities in understanding whether the accounting for income arising from an arrangement was likely to be addressed by AASB 15 or by this Standard; and

(f)                    costs of educating users of the financial statements of