Revenue – ifrs 15 handbook

Are the contracts entered into at or near the same
time with the same customer or related parties
of the customer?
Example 12 – Combination of contracts: Software-related licence 
and customisation services
Software Company S enters into a contract to license its customer relationship 
management software to Customer B. Three days later, in a separate contract, 
S agrees to provide consulting services to significantly customise the licensed 
software to function in B’s IT environment. B is unable to use the software until 
the customisation services are complete. 
S determines that the two contracts should be combined because they were 
entered into at nearly the same time with the same customer, and the goods 
or services in the contracts are a single performance obligation. For further 
discussion on identifying the performance obligations in a contract (Step 2 of 
the model), see 
Chapter 2
.

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20 | Revenue – IFRS 15 handbook
Example 13 – Combination of contracts with government-related 
entities
Developer D enters into a contract to develop and sell a cyber security system 
to Government-related Entity X. Three days later, in a separate contract, D 
enters into a contract to sell the same system to Government-related Entity Y. 
Both entities are controlled by the same government. During the negotiations 
D agrees to sell the systems at a deep discount if both X and Y purchase 
the system.
D concludes that the two contracts should be combined because, among 
other things, X is a related party of Y, the contracts were entered into at nearly 
the same time and the contracts were negotiated as a single commercial 
package. D also needs to assess whether the two systems represent a single 
performance obligation.