AASB approves Implementation Guidance for Not-for-Profit Public Sector Licensors

AASB 15 Revenue from Contracts with Customers, as originally drafted, only provided explicit guidance for revenue recognition for intellectual property (IP) licences from a ‘for-profit perspective’.  No explicit guidance was included for non-IP licences.

The Australian Accounting Standards Board has therefore issued AASB 2018-4 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Public Sector Licensors which includes an Appendix G (to be added to AASB 15) to explain and illustrate the licensing principles in AASB 15 from the perspective of a not-for-profit (NFP) public sector licensor.

This implementation guidance is for NFP public sector entities only. It does not apply to for-profit entities or NFP private sector entities.

The amendments to AASB 15, which apply to annual periods beginning on or after 1 January 2019, include:

  • Expanding the scope of AASB 15 to include non-contractual licences such as those arising from statutory requirements
  • A recognition exemption for short-term licences and licences for which the transaction price is low (although this is not available for licences with variable consideration in their terms and conditions)
  • Guidance for distinguishing a licence from a tax, and
  • How AASB 15 or AASB 16 Leases would apply to non-IP licences (Appendix G, paragraph G1 includes a useful decision tree to assist).

Amendments have also been made to AASB 16 to clarify that licences that are ‘in substance leases’ or contain leases (other than licences of IP) fall within the scope of AASB 16.