Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p27
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 27/91)
Character Range: 80122–82953

obligation to provide the specific services (identified counselling services for a specific number of hours per week in 20X6/X7 to victims of violence) in return for the consideration from the grantor is sufficiently specific to determine when the obligation is satisfied, as it will be clear at the end of each week whether the specified hours of counselling have been provided (refer to paragraph F20 of AASB 15).  The services are also provided to third parties and not consumed by Charity B.

    Accounting treatment

    In accordance with paragraph 9, the related amount for the $2.4 million is accounted for by Charity B as a contract liability in accordance with AASB 15 on recognition of the financial asset in accordance with AASB 9.

    The journal entry for the initial recognition is:

     31 May 20X6 Debit Credit

     Cash  2,400,000

     Contract liability  2,400,000

    Example 7—Donations, management intent and discretionary use
    Charity C's publicly stated objective is to build water wells to provide clean drinking water in developing countries.

    Charity C received 200 donations of $800 each.  The donors indicated the donations are to be used for the purpose of building water wells.

    The above fact pattern applies to Examples 7A–7D, described below.

    Example 7A – Pledges

    In this example, the facts in Example 7 apply, except the 200 donations of $800 each are pledged by donors to Charity C in a telethon, and no cash has yet been received by Charity C.

    Charity C determines it does not control the future economic benefits associated with pledged amounts before receipt of the cash, as it does not have an enforceable right to require the donors to meet their pledge.  Accordingly, the charity does not recognise an asset until the requirements of AASB 9 are satisfied.  No journal entry is required.

    Example 7B – Management intent, no legal or constructive obligations

    In this example, the facts in Example 7 apply, except the Board of Charity C determined at a board meeting that funds raised from the public appeal from which the donated funds arose are to be used only for building water wells in Kenya.  The Board has not publicly communicated this intention and its public statements are limited to those that appear in the Example 7 fact pattern above.

    Scope and asset recognition

    Charity C determines:

                    the $160,000 in donations is an asset the charity acquired for no consideration to further the objectives of the charity.  Accordingly, the donation is within the scope of AASB 1058; and

                    it controls a financial asset ($160,000) within the scope of AASB 9.

    Based on the facts and circumstances, on gaining control of the donations, Charity C determines that the donations do not give rise to