Revenue – ifrs 15 handbook

Example 11 – Administrative task: Registration of software keys
Software Company B licenses and transfers operating system software to 
Customer L. The operating system software will not function on L’s computer 
hardware without a key provided by B. L has to provide B with the serial number 
from the hardware to receive the key. If L orders hardware from a different 
supplier and has not received the hardware when the operating system 
software is delivered, then it is still obliged to pay for the operating system 
software because payment is not contingent on delivery of the key.
In this example, the operating system software is ready for use by L 
and delivery of the key is contingent only on L’s actions. As such, it is an 
administrative task that does not transfer a promised good or service and 
therefore is not considered to be a promised service in the contract. Assuming 
that all other revenue recognition criteria have been met – including L obtaining 
control of the operating system software – B recognises revenue on delivery 
of the operating system software. For discussion on the timing and pattern of 
recognition of licences, see 
Section 9.4
.

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36 | Revenue – IFRS 15 handbook
Only promises that transfer goods or services to the customer 
can be performance obligations
IFRS 15.BC93, BC411(b)
An entity does not account for a promise that does not transfer goods or 
services to the customer. For example, an entity’s promise to defend its patent, 
copyright or trademark is not a performance obligation.
Set-up activities as administrative task
A software-as-a-service (SaaS) provider may perform tasks that are necessary 
for the customer to access its web-based software application. These tasks 
range from a simple activation service in some situations to more complex up-
front activities needed to allow the customer to access the SaaS services from 
the customer’s IT platform. 
Generally, these types of set-up activities provide no incremental benefit 
to the customer and therefore constitute an administrative task. However, 
the necessity of completing these activities before the customer can begin 
accessing the underlying service may affect the timing of when revenue 
recognition may begin.