Document ID: chunk:federal_register_of_legislation:F2023C00402:reg:97:p28
Version: federal_register_of_legislation:F2023C00402
Segment Type: reg
Provision Reference: reg 97 (pt 28/56)
Character Range: 336936–339899

arrangement might not be referred to as either a licence or a tax, but instead, for example, as a 'permit'. The Board noted that, notwithstanding the term used to describe an arrangement, a licensor should consider its substance in accordance with the guidance provided in this Standard and account for that arrangement accordingly.

Application of Australian Accounting Standards
     BC29            The Board considered the applicability of the existing suite of Australian Accounting Standards to licences. The Board also considered the suitability of the scoping principles in AASB 15 in the context of whether its application could be extrapolated to appropriately reflect the economic substance of transactions in accounting for revenue from licences issued under statute. The Board identified the following Australian Accounting Standards as possibly applicable:

          (a)                    AASB 16;

          (b)                   AASB 1058; and

          (c)                    AASB 1059.

     BC30            The Board's views with respect to the application of these Australian Accounting Standards are set out in paragraphs BC31–BC52.

AASB 16 Leases
     BC31            The Board noted that AASB 16 would only apply to licences outside the scope of AASB 15 that satisfy the definition of a lease.

     BC32            In considering whether a licence could satisfy the definition of a lease, and therefore be accounted for in accordance with AASB 16, the Board noted the licence would need to be a contract (see the discussion in paragraphs BC43 for the Board's deliberations on whether all licences are contracts) conveying a 'right to use' an asset for a period of time in exchange for consideration. The asset would also need to be an identified asset with no substantive right of substitution.

     BC33            The Board considered the meaning of 'right to use' in the context of the Application Guidance in AASB 16, which requires the contract to convey the right to control the use of the identified asset for a period of time. In doing so, an entity is required to assess whether a customer has:

          (a)                    the right to obtain substantially all of the economic benefits from the use of the identified asset, such that the customer has rights to direct how and for what purpose the asset is used; and

          (b)                   the right to direct the use of the identified asset, such that relevant decisions about how and for what purpose the asset is used are predetermined. The customer must also have the right to operate the asset without the supplier having rights to change operating instructions, or the customer designed the asset in a way that predetermines how and for what purpose the asset will be used.

     BC34            Accordingly, the Board observed that AASB 16 could only apply to 'right to use' identified assets under contractual licences outside the scope of AASB 15, but