Revenue – ifrs 15 handbook

Effect of different attributes of a licence on determining the nature 
of the entity’s promise
IFRS 15.B62, BC414O–BC414R
,
 IE303–IE306
A licence is, by its nature, a bundle of rights conveyed to a customer. The various 
attributes of a licence (e.g. restrictions on time, geography or use) do not affect 
whether the licence provides a right to use or a right to access the entity’s IP.
IFRS 15.IE303–IE306
For example, Example 59 in the standard discusses a licence to a symphony 
recording that includes restrictions on time, geography and use (i.e. the licence 
is limited to two years in duration, permits use only in Country A and limits 
the customer to use of the recorded symphony only in commercials). These 
restrictions are attributes of the single licence in the contract and do not affect 
the conclusion that the licence provides a right to use the entity’s IP. However, 
in certain fact patterns contractual provisions characterised as restrictions on 
time, geography or use may result in a conclusion that the entity has promised 
to grant multiple licences to the customer (see 
Section 9.5
).
Entity’s activities that significantly affect the IP
IFRS 15.B58, B59A
An entity’s activities that do not transfer a good or service to the customer can 
significantly affect the IP to which the customer has rights when the customer’s 
ability to obtain benefits from the IP is substantially derived from, or dependent 
on, those activities. This is one of the three criteria that have to be met under 
IFRS to recognise revenue for a licence of IP over time. 
When classifying a licence as a right to use or a right to access IP, an entity 
focuses on whether its ongoing activities are expected to change the licence’s 
form or functionality, or whether the customer’s ability to obtain benefit from 
the licence substantially depends on other activities of the entity that are not 
expected to change the form or functionality of the IP (e.g. advertising or other 
activities to support or maintain the value of the IP).