Revenue – ifrs 15 handbook

Is the contract a licence of IP?
(See Section 9.1)
Apply Step 5
guidance
(see Chapter 5)
Apply the general
guidance to the
combined bundle
and consider the
nature of the
licence when
applying Step 5
Chapter 5
(see
Section 9
and
.3)
No
Yes
Does the customer
have a right to access
the entity’s IP?
(See Section 9.3)
Sales- or usage-based royalties are
recognised at the later of when sale
or usage occurs, and satisfaction of the
performance obligation (see Section 9.6)
Sale of IP/service
Licence of IP
Sales- or usage-
based royalties
are estimated
and subject to
the general
’
model s
constraint under
Step 3
Section 3.1
(see
)
Is the licence distinct
from non-licence
?
goods or services
(See Section 9.2)
Over-time
performance
obligation
Point-in-time
performance
obligation
No
Yes
If the contract
s
include sales- or usage-
based royalties, is the
licence the predominant
item to which the
royalty relates?

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9 Licensing | 207
9.1 Licences of intellectual property
| 
9.1 
Licences of intellectual property
IFRS 15.B52
A licence of IP establishes a customer’s rights to the IP of another entity. Examples 
of IP licences include: 
– software and technology;
– franchises; 
– patents, trademarks and copyrights; 
– films, music and video games; and
– scientific compounds.
Example 1 – Promise is a service not a licence
Streaming Service S provides a music streaming service to customers. S enters 
into a one-year contract that grants Customer C a licence to access the music 
content via the internet on C’s personal devices. However, C does not have the 
ability to download the music content during the contract term and it can listen 
to the music only through the internet.
S evaluates whether it is providing C with a service or a licence to its content. S 
concludes that the contract does not include a licence because C does not have 
the ability to download the music during the contract term and use it without 
accessing S’s site. As a result, the licence guidance does not apply.