Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p64
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 64/91)
Character Range: 182595–185643

measurement error; and

(b)                   the time and cost of estimating the aggregate of the stand-alone selling prices of the promised goods or services separately from the transaction price would often exceed the benefits to users.

BC75            Consequently, in ED 260 the Board proposed that a not-for-profit entity be required to account for a separately identifiable donation component of a contract with a customer separately from the revenue that is recognised when the entity transfers a good or service to the customer, where that donation component is material.  That is, the contract would be partly accounted for in accordance with this Standard (in respect of the donation component), and partly in accordance with AASB 15 (in respect of any performance obligations).

BC76            The Board proposed that the identification of whether a contract with a customer includes a donation component to be accounted for separately requires a qualitative assessment of whether:

(a)                    the customer intended to make a donation to the entity; and, if so,

(b)                   the donation is separately identifiable from the goods or services promised in the contract.  A donation is separately identifiable from the goods or services promised in the contract if:

(i)                     there is evidence that part of the consideration paid or payable by the customer is not part of the consideration to which the entity expects to be entitled in exchange for the promised good or service;

(ii)                   the entity's entitlement to retain the donation is not conditional on that entity transferring a good or service to the customer (donor); and

(iii)                 the amount of the donation component can be measured reliably.

BC77            Some respondents to ED 260 considered that accounting separately for donation components does not provide information sufficiently useful to justify the cost.  However, the majority of respondents to ED 260 agreed that any donation component included in a contract with a customer should be separated from the contract and accounted for in accordance with AASB 1058.  Some of these respondents did not support the proposed qualitative assessment of whether a donation component is separately identifiable (based, in part, on whether the customer intended to make a donation).  These constituents argued that it is unnecessary and unworkable to impose a 'customer intention' test for separately identifying a donation component.

BC78            In addition, the Board received feedback from its Project Advisory Panel that while understanding customer relationships was fundamental to the operation of AASB 15, the proposed approach to accounting for transactions involving both a contract with a customer and a donation component was not intuitive.  The Board discussed feedback that the approach proposed in ED 260 overcomplicates the accounting, implies that the not-for-profit entity needs to 'stand in the shoes' of the transferor, and prioritises