Accounting for income in NFPs
The already complex accounting landscape for Not-for-Profits, is set to change beginning 1 January 2019, with the Accounting Standards Board releasing their new income recognition requirements.
Application of AASB 1058 Income for Not-for-Profit Entities, coincides with new Revenue Accounting Standards, AASB 15 Revenue from Contracts with Customers (AASB 15) and it’s important to this report in conjunction with the Accounting for income and Accounting for Revenue report.
It is important to note that on 24th December 2018, the AASB issued the amending standard for peppercorn leases and the report reflects the changes of AASB 1058. The requirement for NFPs to fair value their peppercorn leases can now be deferred. The AASB has issued an amending standard that permits NFPs to elect not to apply the fair value requirement and instead disclose the details of the peppercorn leases in their financial statements. This does not mean the leases will not be recognised, but that the right-of-use asset will be valued based on the value of the lease liability.