FINANCIALS
2. Application of new and revised
Accounting Standards (continued)
The issuance of AASB 1058 also results in
consequential amendments to other Standards
and Interpretations, as set out below:
The core principle of AASB 15 is that an entity should
recognise revenue to depict the transfer of promised
goods or services to customers in an amount that
reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services.
Specifically, the Standard introduces a 5-step approach
to revenue recognition:
• AASB 15 Revenue from Contracts with Customers
• AASB 16 Leases
• AASB 101 Presentation of Financial Statements
• AASB 116 Property, Plant and Equipment
• AASB 117 Leases
• AASB 138 Intangible Assets
• AASB 1004 Contributions
• AASB 1057 Application of Australian
Accounting Standards
Among the amendments listed above, the key
amendments to note are the:
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• Step 1: Identify the contract(s) with a customer
• Step 2: Identify the performance obligations in
the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to the
performance obligations in the contract
• Step 5: Recognise revenue when (or as) the
entity satisfies a performance obligation
Under AASB 15, an entity recognises revenue when
(or as) a performance obligation is satisfied, i.e.
when ‘control’ of the goods or services underlying
the particular performance obligation is transferred
to the customer.
• new lessee accounting requirements for
leases at significantly below-market terms and
conditions (commonly known as ‘peppercorn
leases’) principally to enable the lessee to
further its objectives (as amended in AASB
16 and AASB 117). This requires the lessee to
recognise the leased asset / right-of-use asset
at fair value per AASB 13, the lease liability
per AASB 117 / AASB 16 and the residual as
income at the inception of the lease;
• requirement to measure inventories (e.g.
donated inventories) at current replacement cost
where the consideration for those inventories
is significantly less than fair value principally to
enable the entity to further its objectives (as
amended in AASB 102);
• requirement to measure the cost of the asset (e.g.
property, plant and equipment, intangible asset
or investment property) at fair value per AASB 13
where the consideration for the asset is significantly
less than fair value principally to enable the entity
to further its objectives (as amended in AASB 116,
AASB 138 and AASB 140); and
• removal of all income recognition requirements
for private sector NFP entities and majority of
income recognition requirements for public
sector NFP entities in AASB 1004.
d) AASB 15 ‘Renumeration Contracts with Customers’
effective for annual periods beginning on or after
1 January 2019. Expected to be initially adopted
for the financial period ending 31 December 2019.
In May 2016, the AASB issued AASB 2016-3
Amendments to Australian Accounting Standards
– Clarifications to AASB 15 in relation to the
identification of performance obligations, principal
versus agent considerations, as well as licensing
application guidance.
In December 2016, the AASB issued the
following amending Standards that applies
to not-for-profit entities:
• AASB 2016-7 Amendments to Australian
Accounting Standards – Deferral of AASB 15
for Not-for-Profit Entities which deferred the
application date for not-for-profit entities to 1
January 2019
• AASB 2016-8 Amendments to Australian
Accounting Standards – Australian
Implementation Guidance for Not-for-Profit
Entities which introduced not-for-profit-specific
implementation guidance on ‘enforceability’
of a contract (Step 1), ‘sufficiently specific’
performance obligations (Step 2) and separate
recognition of ‘donation’ element (Step 4).
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