Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p34
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 34/91)
Character Range: 99265–102071

time

    On 1 July 20X1, a private sector not-for-profit school, School A, receives a cash grant of $2 million from the State Government to build an early learning centre (ELC) on the school's land to the standard specified by government department regulations applicable to early learning (EL) programs for children.

    The terms of the agreement require School A to:

                    construct the ELC to include two rooms for the delivery of the EL programs and retain control of the ELC;

                    return all unspent, uncommitted funding after building the ELC; and

                    reimburse the State Government the whole or a portion of the grant amount (calculated on a pro-rata basis) if the ELC ceases to be used for the provision of EL programs within ten years of the date on which the funds have been fully paid.

    At the end of the School's financial year (30 June 20X2), a survey of work completed indicated that the construction of the ELC was 60 percent complete and $1.2 million of the funding had been spent.  The ELC was completed on 30 June 20X3 and the $2 million was fully spent.

    Scope and asset recognition

    School A determines:

                    the $2 million grant is an asset the school acquired for consideration that is significantly less than the fair value of the grant to further the objectives of the school.  Accordingly, the grant is within the scope of AASB 1058; and

                    it controls a financial asset ($2 million) within the scope of AASB 9.

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

                    requires the transfer of a financial asset to enable the school to acquire or construct a non-financial asset, the ELC, to the identified specification;

                    relates to a non-financial asset (the ELC) that the school will be able to recognise as an asset under another Standard (AASB 116);

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

                    is enforceable, as it requires the school to refund the grant received to the State Government if the money is not used as specified in the agreement (eg non-construction of the ELC, unspent funds or EL programs cease to be provided within ten years).

    School A 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 School A;

                    a