New Revenue Rules - Implication for Not-For-Profit Entities
Late last year the Australian Accounting Standards Board made the announcement to adopt AASB 15 Revenue from Contracts with Customers. The adoption of AASB 15 could have an impact on a number of industries, including charities, research foundations, construction, manufacturing, telecommunications, software development and licensing, and real estate.
The core principle of the new standard is that revenue should be recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the provider of the goods or services expects to be entitled.
Revenue should be deferred only in certain circumstances where there are:
In all other instances, where the terms and conditions are generic; (for example, when only a time frame is specified by which the service is to be provided) the revenue is to be recognised at the time of receipt. This revenue recognition process involves the following key steps:
The application date for the standard is expected to be 1 January 2017; however the standard permits for early adoption.
The standard requires retrospective implementation, however provides a choice between two transition approaches, namely:
Should you have any queries in relation to the above or need specific advice in relation to the proposed changes for your particular circumstances, please contact your ESV Engagement Partner on 9283 1666.
Article by Lisa Brink