Garn Contributions Non-reciprocal transfers to the entity. This is particularly the case where, for example, fees are charged by a not-for-profit entity for the potential use of a general pool of facilities. If the pledge is not enforceable against the donor, the entity does not control the contribution. Future economic benefits that have been contributed to the entity by parties external to the entity, other than those which result in liabilities of the entity, that give rise to a financial interest in the net assets of the entity which: Non-reciprocal transfers to the entity. Paragraphs in bold type state the main principles.
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Application 1. Measurement of Contributions 8. Income shall be measured at the fair value of the contributions received or receivable. Recognition of Contributions of Assets 9.
A contribution occurs when an entity receives an asset, including the right to receive cash or other forms of asset without directly giving approximately equal value to the other party or parties to the transfer; that is, when there is a non-reciprocal transfer. Contributions would, for example, include donated assets. Contributions that are income exclude contributions by owners.
In some cases it may be difficult to determine whether the entity has control of a contribution or the right to receive a contribution. One such case could be economic benefits expected to be received under a multi-year public policy agreement. The entity does not obtain control of a contribution under such an agreement until it has met conditions or provided services or facilities that make it eligible to receive a contribution. On this basis, under multi-year public policy agreements, income would be recognised only in relation to contributions received or receivable under policy agreements.
Another example is where a donor pledges a donation to an entity. If the pledge is not enforceable against the donor, the entity does not control the contribution. In some cases it may be difficult to determine whether the entity is giving approximately equal value to the other parties to a transfer. This is particularly the case where, for example, fees are charged by a not-for-profit entity for the potential use of a general pool of facilities.
In circumstances where clubs and professional associations charge fees in return for contributors being able to enjoy the use of facilities, receive publications or practice in a particular vocation for a defined period, an exchange transaction can be presumed and the fees would not be treated as contributions. The recipient of the fees would have a contractual or constructive obligation to refund some or all fees if it were unable to provide the facilities or services.
Liabilities Forgiven The gross amount of a liability forgiven by a credit provider shall be recognised by the borrower as income. Where equity is substituted for a liability, this is not treated as a forgiveness. Disclosures
Federal Register of Legislation - Australian Government
AASB 1004 PDF