Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p36
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 36/91)
Character Range: 104569–107425

asset – income recognised at a point in time

    The State Government makes a cash grant of $100,000 to Hospital X to acquire 16 intensive care hospital beds that are to be controlled by the entity and used in its operations.  Six beds are acquired by the hospital in its first purchase, and the remaining ten beds in a second purchase.

    Scope and asset recognition

    Hospital X determines:

                    the $100,000 grant is an asset Hospital X acquired for consideration that is significantly less than the fair value of the grant to further the objectives of the hospital.  Accordingly, the grant is within the scope of AASB 1058; and

                    it controls a financial asset ($100,000) within the scope of AASB 9.

    Hospital X determines its agreement with the State Government is a transfer of a financial asset to enable it to acquire a recognisable non-financial asset to be controlled by the hospital that meets the criteria in paragraph 15 of AASB 1058.  That is, the agreement:

                    requires the transfer of a financial asset to enable Hospital X to acquire non-financial assets (the hospital beds) that conform to identified technical specifications;

                    relates to non-financial assets that the hospital will be able to recognise as assets under another Standard (AASB 116);

                    does not involve a transfer of a non-financial asset to or on behalf of the State Government; and

                    is enforceable, as the Government may sue for specific performance or transfer of the ownership of any assets acquired with the funds if the money is not used to acquire the non-financial assets.

    Hospital X applies paragraph 16 and determines that it does not need to recognise related amounts of the following types:

                    a contribution by owners, as the grantor does not control or have an ownership interest in Hospital X;

                    a contract with a customer within the scope of AASB 15.  The grant to acquire the hospital beds for Hospital X does not require a sufficiently specific transfer of goods or services to the grantor or another party (see paragraph F20 of AASB 15);

                    a lease liability as defined in AASB 16, as the agreement does not provide a right to use a specified asset;

                    a financial liability within the scope of AASB 9, as there is no obligation to provide cash or another financial asset to other parties; and

                    a provision within the scope of AASB 137, as the agreement specifies legal obligations and there are no other constructive obligations to consider.

    Accounting treatment

    In accordance with paragraph 16 of AASB 1058, Hospital X recognises the grant initially as a liability at the point in time when it obtains control of