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10 Oct. 2019

Fatal-Flaw Review Draft of Amendments to Research Grant Examples accompanying AASB 15

Fatal-flaw review draft of amendments to research grant examples accompanying AASB 15. Changes are proposed to the examples addressing when a required transfer of research findings represents a sufficiently specific performance obligation, to remove the references to re-performing research activities.  Comments are due to the AASB by 8 November 2019.

The proposed Standard would amend Illustrative Examples 4A and 4B accompanying AASB 15 Revenue from Contracts with Customers to clarify the analysis of how paragraph 35(a) of AASB 15 applies.

Paragraph 35(a) addresses whether the customer (donor) simultaneously receives and consumes the benefits provided by an entity’s performance (research) as the entity performs, as one basis for the entity transferring control of a good or service over time, and therefore satisfying a performance obligation and recognising revenue over time.

Whilst the original conclusions in the Illustrative Examples are appropriate, applying the original analysis to a different fact pattern could lead to an inappropriate application of paragraph 35(a). The question of whether another entity would need to re-perform the research is relevant only if it is uncertain whether the donor simultaneously receives and consumes the benefits of the research activities as they are performed.

The amendments do not change the requirements of AASB 15 or the conclusions of the Illustrative Examples.

Please submit comments to the AASB by 8 November 2019 via the AASB website, LinkedIn or email.