Revenue – ifrs 15 handbook

No explicit guidance on distinguishing attributes of a licence from 
additional licences
IFRS 15.IE304, BC414O–BC414R
The standard does not include explicit guidance on distinguishing attributes of a 
licence from additional licences, so judgement is required to determine when a 
restriction creates multiple licences and when it is an attribute of the licence.
The basis for conclusions notes that an entity considers all of the terms in a 
contract when considering whether promised rights result in the transfer of one 
or more licences to the customer. This judgement is necessary to distinguish 
between contractual provisions that create promises to transfer rights to use 
the entity’s IP from contractual provisions that establish when, where and how 
those rights may be used.
Example 59 of the standard illustrates that restrictions of time, geography and 
use are considered as attributes of a single licence in a contract.
Distinguishing attributes of a single licence from additional 
promises to transfer licences
A provision in a contract that requires the entity to transfer additional rights to 
use or access IP that the customer does not already control generally describes 
an additional promise for the entity to fulfil. In 
Example 13A
 in this chapter, 
the provision restricting the customer’s ability to use the IP in Canada initially 
means that, until those rights start, the entity has a remaining obligation to 
transfer those rights that the customer does not already control. Because of 
that provision, the contract in Example 13A could easily have been written as a 
contract to grant two distinct licences (one to air Film M in the US and a second 
licence to air M in Canada). The accounting outcome in a scenario such as 
Example 13A does not depend on how the contract is written.

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9 Licensing | 225
9.6 Sales- or usage-based royalties
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In contrast, 
Example 13B
 in this chapter illustrates that licences are, by nature, 
a bundle of rights to IP that are often limited in duration and scope (geographic 
and usage). The provisions describing the duration and scope of the customer’s 
rights in Example 13B are distinguished from the requirement in Example 13A 
that the entity transfer additional rights after some other rights have been 
transferred (i.e. to fulfil a remaining promise to transfer those additional rights).