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29 Oct. 2020

AASB Staff FAQ on initial recognition of an asset acquired by an NFP entity in transactions in the scope of AASB 1058

Staff FAQs for not-for-profit (NFP) entities have been extended to assist with accounting for transactions in scope of AASB 1058 Income of Not-for-Profit Entities, such as grants, in relation to which an NPF entity has partially but not yet fully performed the activities required under the agreement and the associated asset (e.g. grant funding in cash or other asset) has not yet been received.

In those circumstances (such as accrued grants) a non-cash asset might exist (for example, a financial asset under AASB 9 Financial Instruments representing the contractual right to receive the cash) and should be recognised and appropriately described in the statement of financial position.

The focus of this Section is on the initial recognition of this type of asset, although it also addresses some consequential matters relating to the recognition of associated income.

The FAQ includes a simple practical example scenarios to illustrate the accounting.