Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p40
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 40/91)
Character Range: 115312–118293

Charity B

     20X6 20X5

     $ $

     Donation income – unrestricted 800,000 700,000

     Donation income – restricted 2,400,000 3,000,000

     Other revenue   850,000   820,000

     Total revenue 4,050,000 4,520,000

     Total expenses 1,700,000 1,300,000

     Total comprehensive income 2,350,000 3,220,000

      Total comprehensive income – unrestricted (50,000) 220,000

      Total comprehensive income – restricted 2,400,000 3,000,000

    Notes to the Financial Statements

     Note X – Changes in Restricted Net Assets 20X6 20X5

     $ $

     Opening balance 3,000,000 900,000

     Grant income received – time restrictions 2,400,000 3,000,000

     Grant funds – time restrictions expired during the year (1,000,000)  (900,000)

     Closing balance  4,400,000 3,000,000

       During the year, Charity B received a grant of $2.4 million from the government.  This grant is to be spent in accordance with our charter in the 20X6/X7 year.  Accordingly, the full amount of the grant received is treated as restricted net assets at the current reporting date.

       The grant of $3 million received in June 20X5 was restricted by the donor (Outback Health Services Trust) to the provision of health services over a three-year period from 1 July 20X5.  Therefore, $2 million of this grant continues to be identified as restricted net assets at the current reporting date.

Transition (paragraphs C2–C7)

IE9                 Example 14 illustrates the modified retrospective initial application of this Standard to peppercorn leases.

    Example 14—Peppercorn leases and modified retrospective initial application

    School A, a not-for-profit school, was built on land leased to it by Church B. Church B (the lessor) leases the land to School A (the lessee) for a payment of $10 per year for 99 years (ie a peppercorn lease).  On the date of transition to this Standard, the present value of the remaining lease payments is $100.

    School A has a reporting period ending 30 June and recognises a right to use land under AASB 16 for the first time for its reporting period ending 30 June 2020.  The fair value of the right of use of the land is $2 million at 1 July 2019.  Prior to applying AASB 1058, School A had not previously recognised a right-of-use asset for land or a lease liability.

    AASB 1058 (effective date 1 January 2019) also applies to School A for the first time for its reporting period ending 30 June 2020.  As there is a significantly below-market lease at inception of the lease, School A identifies that the transaction is within the scope of AASB 1058 and elects to apply the modified retrospective approach permitted on transition to AASB 1058.

    School A accounts for the peppercorn lease in accordance with the transition requirements of AASB 1058 by:

                    recognising the right-of-use asset for the land as at 1 July 2019 at the fair value of $2 million;

                    recognising the lease