Revenue – ifrs 15 handbook

Example 11A – Right-to-access licence
Company S enters into a contract with Customer C on 15 November Year 0 
to grant C a five-year licence to its IP, with the licence period beginning on 
1 January Year 1 and ending on 31 December Year 5. S provides C with a copy 
of the IP on 1 December Year 0. S determines that the licence provides a right 
to access.
Because the licence provides C with a right to access S’s IP, S will recognise 
the revenue from the licence over the five-year term (from 1 January Year 1 until 
31 December Year 5) as it satisfies its performance obligation to provide C with 
access to the IP. S cannot begin to recognise revenue until 1 January Year 1 
when C can begin to use and benefit from the licence.
Example 11B – Right-to-use licence
Modifying Example 11A, assume that the licence provides Customer C with a 
right to use Company S’s IP.
Because the licence provides a right to use its IP, S recognises the revenue from 
the licence at a point in time on 1 January Year 1. This date is the first point in 
time at which C:
– has obtained control of the licence based on an evaluation of the general 
guidance on performance obligations satisfied at a point in time; and
– is able to use and benefit from the licence.

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222 | Revenue – IFRS 15 handbook
Example 12 – Renewal of a right-to-use licence
Company S enters into a contract with Customer C on 1 January Year 0 to grant 
C a three-year licence to its IP for consideration of 100. The licence period is 
from 1 January Year 1 to 31 December Year 3. S determines that the licence 
provides a right to use and recognises the revenue from the licence at a point 
in time on 1 January Year 1, when C obtains control of the licence and is able to 
use and benefit from the licence.
On 1 January Year 3, S and C agree and approve a renewal of the licence for 
a further three-year period for consideration of 100 payable at the date of the 
agreement. There are no other changes to the licence (i.e. the other terms and 
conditions of the licence and the IP remain the same). The renewal period is 
from 1 January Year 4 to 31 December Year 6. 
We believe that S should choose an accounting policy, to be applied 
consistently, to recognise 100 revenue for the renewal on 1 January Year 3 
(i.e. when the renewal is agreed) or 1 January Year 4 (i.e. when the renewal 
period starts).