Revenue – ifrs 15 handbook

9.6 
Sales- or usage-based royalties
Exception for sales- or usage-based royalties aligns the accounting for different licence types ..................................... 226
Judgement is required to assess when a licence of IP is ‘predominant’ ........................................................................ 226
Application of royalties exception to milestone payments ............................................................................................. 227
Guaranteed minimum payment – Right-to-use licence .................................................................................................. 228
Guaranteed minimum payment – Right-to-access licence............................................................................................. 228
Variable royalty rates – Right-to-use licence................................................................................................................... 228
Variable royalty rates – Right-to-access licence ............................................................................................................. 229
Allocating sales- or usage-based royalties to multiple performance obligations ............................................................ 229
10 
Other application issues
10.1 Sale with a right of return
Partial refunds are measured based on the portion expected to be refunded ................................................................ 237
Restocking fees and costs ............................................................................................................................................. 237
Conditional right of return .............................................................................................................................................. 238
Historical experience may be a source of evidence for estimating returns .................................................................... 238
10.2 Warranties
A refund for defective services may be variable consideration rather than a warranty ................................................... 240
Defective product returns in exchange for compensation ............................................................................................. 241
Liquidated damages and similar types of contractual terms .......................................................................................... 241
Some warranty arrangements may be in the scope of the insurance standard .............................................................. 241
‘Reasonably account’ threshold is undefined ................................................................................................................ 243
Length of the warranty period is an indicator of the type of warranty, but is not always determinative .......................... 243
Repairs outside the warranty period as a customary practice ........................................................................................ 244
An ‘extended warranty’ may be a service-type warranty or an assurance-type warranty ............................................... 244