Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p29
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 29/91)
Character Range: 85314–88351

Consequently, Charity C elects to disclose the following information regarding the externally imposed restrictions on the donations by dividing total comprehensive income into restricted and unrestricted amounts in the statement of profit or loss and other comprehensive income in accordance with paragraph 37 of AASB 1058.

     Summary of Statement of Profit and Loss and Other Comprehensive Income of Charity C

     $

     Donation income – restricted 160,000

     Donation income – unrestricted 230,000

     Other revenue   10,000

     Total revenue 400,000

     Total expenses 220,000

     Total comprehensive income 180,000

      Total comprehensive income – restricted 160,000

      Total comprehensive income – unrestricted 20,000

    Charity C also elects to disclose restricted funds in the statement of financial position by presenting restricted and unrestricted components of retained profits.

    Example 7C – Not enforceable and for discretionary use

    In this example, the facts in Example 7 apply, except Charity C collected the donations as part of a campaign to raise funds for building water wells in Kenya.  However, Charity C indicated that any funds not required would be spent on other purposes in Kenya.

    Subsequently, Charity C suspended the construction of the water wells due to a disease outbreak in Kenya and redirected some of the donations received for the construction of the water wells to emergency food and medical supplies for the affected people in that country.

    Consistent with Example 7B, Charity C determines it controls a financial asset within the scope of AASB 9 and does not have a related contribution by owners, lease liability, financial liability or provision, as specified in another Australian Accounting Standard.

    Consistent with Example 7B, Charity C assesses whether it has any related amounts in the form of revenue from a contract with a customer in accordance with AASB 15.  Charity C's promise to transfer goods or services related to the donations is not an enforceable arrangement with the donors.  Charity C has the discretion to direct the use of the donated money, provided the use is consistent with the overall objectives of the charity, and the donors would not have recourse against Charity C for redirecting the donations.  Consequently, Charity C does not have a contract with a customer as defined under AASB 15.

    Accounting treatment

    Accordingly, Charity C recognises the donations as income when it gains control of the donated cash, in accordance with AASB 1058.

    The journal entry for the initial recognition (in aggregate) is:

      Debit Credit

     Cash  160,000

     Income  160,000

    Example 7D – Enforceable and sufficiently specific performance obligation

    At the public launch of Charity C's appeal for donations, Charity C:

                    reaffirmed its 20-year history of building water wells in Kenya, with the funds raised for building water wells having been used only for that purpose and in