Revenue – ifrs 15 handbook

Example 7 – Technology company: Hosted software with on-
premises application
Company D offers its customers access to its hosted software, which permits 
access to D’s data. A customer can then manipulate that data in a variety of 
ways. The software is hosted only on D’s servers and is accessible only in 
online mode. D also offers customers use of an on-premises application that 
converts the data into other, more useable, formats – e.g. an Excel spreadsheet. 
However, the on-premises application can provide search results only when it 
is connected to the hosted software. There are no other hosted applications 
that a customer can use with D’s on-premises application and D does not sell 
access separately.
D concludes that the licence for the hosted software is not capable of being 
distinct from its hosting services. This is because the software can be used only 
while it is hosted on D’s servers and is not available separately in the market. 
D also concludes that the on-premises application is not capable of being 
distinct, because customers cannot benefit from the on-premises feature 
without the hosted software or together with other readily available resources. 
Example 8 – Media company: Magazine subscription that includes 
printed copies and access to online content
Media Company P offers magazine subscriptions to customers. When 
customers subscribe, they receive a printed copy of the magazine each month 
and access to the magazine’s online content. 
P evaluates whether the promises to provide printed copies and online access 
are separate performance obligations. P determines that the arrangement 
includes two performance obligations for the following reasons.
– The printed copies and online access are both capable of being distinct 
because the customer could use them on their own. 
– The printed copies and online access are distinct within the context of the 
contract because they are different formats so they do not significantly 
customise or modify each other, nor is there any transformative relationship 
into a single output.

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34 | Revenue – IFRS 15 handbook