Revenue – ifrs 15 handbook

End of 
End of 
End of 
Inception
Year 1
Year 2
Year 3
Total
Fixed
Licence
3,000
1
-
-
-
3,000
Upgrades
-
2,333
2
2,333
2
2,333
2
7,000
Variable
Licence
-
1,500
3
7,500
5
3,000
7
12,000
Upgrades
-
3,500
4
17,500
6
7,000
8
28,000
Cumulative 
revenue
Licence
3,000
4,500
12,000
15,000
15,000
Upgrades
-
5,833
25,666
35,000
35,000
Notes 
1. 10,000 minimum × 30% allocation. This amount is recognised immediately on transfer 
of the licence because it is a right-to-use licence recognised at a point in time. 
2. 10,000 minimum × 70% allocation × 1/3 complete. Only a portion is recognised 
each period because this amount is recognised over time. 
3. 5,000 royalty above the minimum (15,000 - 10,000) × 30% allocation. 
4. 5,000 royalty above the minimum (15,000 - 10,000) × 70% allocation. 
5. 25,000 additional royalty × 30% allocation. 
6. 25,000 additional royalty × 70% allocation. 
7. 10,000 additional royalty × 30% allocation. 
8. 10,000 additional royalty × 70% allocation.
Approach 2: Allocate fixed and variable consideration together
T allocates the 50,000 estimated transaction price on a relative stand-alone 
selling price basis as follows: 
– 15,000 to the licence; and 
– 35,000 to the when-and-if-available upgrades. 
 

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9 Licensing | 233
9.6 Sales- or usage-based royalties
| 
When (or as) the performance obligations are satisfied, T recognises as revenue 
the lesser of the amount allocated to the performance obligations satisfied or 
the amount that is no longer subject to the royalty constraint.