Revenue – ifrs 15 handbook

Application of the general guidance on performance obligations 
satisfied at a point in time
IFRS 15.38
The standard states that a right-of-use licence is satisfied at a point in time and 
that the indicators for determining when control transfers generally apply (see 
Section 5.4
). However, for licences of IP that are a right of use, the standard 
adds an additional requirement that revenue cannot be recognised before the 
beginning of the period in which the customer can begin to use and benefit 
from the licence. 
Although the point at which the customer can begin to use and benefit from 
the licence will typically be readily determinable, the point-in-time transfer of 
control indicators may not be applied to licences as easily as they might be 
to physical goods. For example, there may not be ‘legal title’ to a licence and 
it may be difficult to assess whether the customer has the significant risks 
and rewards of a licence. However, the contract can be viewed as analogous 
to title to a licence and availability of a copy of the IP (when applicable) as the 
equivalent of ‘physical possession’. Assessing the entity’s right to payment in 
a licence contract should not be significantly different from that assessment in 
other scenarios.

---

© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
9 Licensing | 223
9.5 Contractual restrictions and attributes of licence
| 
Consequently, control of a licence will generally transfer to the customer when: 
– there is a valid contract between the parties;
– the customer has a copy or the ability to obtain a copy of the IP; and
– the customer can begin to use and benefit from the licence.
9.5 
Contractual restrictions and attributes of 
licences
IFRS 15.B62
The following factors are not considered when determining the nature of the entity’s 
promise in granting a licence:
– restrictions of time, geography or use of the licence; and 
– guarantees provided by the licensor that it has a valid patent to the underlying IP 
and that it will maintain and defend that patent.