Revenue – ifrs 15 handbook

Example 7 – Assessing the nature of a software licence with 
unspecified upgrades
Software Company X licenses its software application to Customer Y. Under the 
agreement, X will provide updates or upgrades on a when-and-if-available basis; 
Y can choose whether to install them. Y expects that X will undertake no other 
activities that will change the functionality of the software.
Although the updates and upgrades will change the functionality of the 
software, they are not activities considered in determining the nature of the 
entity’s promise in granting the licence. The activities of X to provide updates or 
upgrades are not considered because they transfer a promised good or service 
to Y – i.e. updates or upgrades are distinct from the licence. Therefore, the 
software licence provides a right to use the IP that is satisfied at a point in time.

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216 | Revenue – IFRS 15 handbook
Example 8 – Assessing the nature of a film licence and the effect of 
marketing activities
Film Studio C grants a licence to Customer D to show a completed film. C plans 
to undertake significant marketing activities that it expects will affect box office 
receipts for the film. The marketing activities will not change the functionality of 
the film, but they could affect its value.
C would probably conclude that the licence provides a right to use its IP and, 
therefore, is transferred at a point in time. There is no expectation that C will 
undertake activities to change the form or functionality of the film. Because 
the IP has significant stand-alone functionality, C’s marketing activities do not 
significantly affect D’s ability to obtain benefit from the film, nor do they affect 
the IP available to D.