Document ID: chunk:federal_register_of_legislation:F2023C00402:front:0:p79
Version: federal_register_of_legislation:F2023C00402
Segment Type: other
Provision Reference: 
Character Range: 206276–209297

University A concludes that the performance obligation is satisfied over time as the university's performance creates or enhances an asset (knowledge – the IP) that the donor controls as the asset is created or enhanced (AASB 15, paragraph 35(b)). Accordingly, the university recognises revenue over time as it satisfies the performance obligation. The university elects to measure its progress towards complete satisfaction of the performance obligation on the basis of an input method, such as labour hours expended.

    Example 3—Research activities—Provision of licence to donor

    Example 3A – Enforceable agreement, sufficiently specific performance obligation, licence granted to donor (right to access IP)

    In this example, the facts of Example 2 apply, except that:

                    University A retains control of the IP arising from the research, instead of the IP transferring to the donor;

                    the IP is licensed permanently to donor B at the commencement of the agreement; and

                    the licence covers the research activities undertaken and the results that arise over the term of the agreement as the IP is developed.

    University A concludes its arrangement with donor B is a contract with a customer as defined in AASB 15. This is on the basis that:

                    University A's promise of specified research and granting of the licence is enforceable as the grant is refundable if the research is not undertaken;

                    University A identifies that its promise to grant the licence to the donor is sufficiently specific to be a performance obligation. The university determines that the research services are required to develop the IP in order to fulfil the contract and therefore do not, of themselves, give rise to a transfer of goods or services to the donor; and

                    University A determines that the requirements for annual progress reports and a final report and publication of research results are an acquittal process that will assist it to measure its progress towards satisfaction of the performance obligation.

    Accounting treatment

    In accordance with AASB 15, University A allocates the cash grant to its identified performance obligation (granting of the licence to the IP) and recognises the financial asset (cash) and a contract liability of $1.2 million on initial recognition.

    University A concludes that the performance obligation is satisfied over time as the licence provides the donor with a right to access the entity's IP as it exists throughout the licence period (paragraph B58):

                    the university's activities significantly affect the IP to which the donor has rights;

                    the licence exposes the donor to any positive or negative effects of the university's activities; and

                    the university's activities do not result in the transfer of a good or service to the donor as those activities occur.

    Accordingly,