AASB 1058 INCOME OF NOT-FOR-PROFIT ENTITIES
This standard replaces AASB 1004 ‘Contributions’ in respect to income recognition requirements for not-for-profit (‘NFP’) entities. The timing of income recognition under AASB 1058 will be dependent upon whether the transaction gives rise to a liability or other performance obligation at the time of receipt.
Income under the s tandard will be recognised where: an asset is received in a transaction, such as by way of grant, bequest or donation; there has either been no consideration transferred, or the consideration paid is significantly less than the asset’s fair value; and where the intention is to principally enable the entity to further its objectives. For transfers of financial assets to the entity which enable it to acquire or construct a recognisable non-financial asset, the entity must recognise a liability amounting to the excess of the fair value of the transfer received over any related amounts recognised. Related amounts recognised may relate to contributions by owners, AASB 15 revenue or contract liability recognised, lease liabilities in accordance with AASB 16, financial instruments in accordance with AASB 9, or provisions in accordance with AASB 137. The liability is brought to account as income over the period in which the entity satisfies its performance obligation. If the transaction does not enable the entity to acquire or construct a recognisable non-financial asset to be controlled by the entity, then any excess of the initial carrying amount of the recognised asset over the related amounts is recognised as income immediately.
Where the fair value of volunteer services received can be measured, a private sector NFP entity can elect to recognise the value of those services as an asset where asset recognition criteria are met or otherwise recognise the value as an expense. For public sector local governments, government departments, general government sectors (GGS’s) and whole of government entities, volunteer services received must be recognised as assets or expenses where the fair value can be reliably measured and the entity would have purchased those services if they had not been donated. Such government entities may also elect to adopt such accounting in instances where those services would not have been acquired if not donated. In all other instances, the value of such services will remain unrecognised.
Disclosures required under the standard are more extensive than those currently applicable under AASB 1004.