The consideration received in connection with nonrefundable upfront fees should

The consideration received in connection with

This preview shows page 9 - 12 out of 17 pages.

The consideration received in connection with nonrefundable upfront fees should be added to the other consideration received in the contract. The total amount of consideration the entity expects to receive should then be allocated to the distinct performance obligations. In some cases, there may be a distinct performance obligation in connection with the upfront fee. If the fee is related to a distinct performance obligation, the revenue will be allocated to that performance obligation based on its relative standalone selling price. That amount may or may not be the same as the upfront fee. This can result because the timing of payments does not always correlate to the timing of goods or services delivered. Licensing A licence establishes a customer’s rights to the intellectual property of an entity. Licences of intellectual property may include, but are not limited to, licences of any of the following: (a) software and technology; (b) motion pictures, music and other forms of media and entertainment; (c) franchises; and
Image of page 9
(d) patents, trademarks and copyrights. An entity’s determination of whether a license is a right to use versus right to access is based on meeting specific criteria relating to whether the customer can direct the use of, and obtain substantially all the benefits from the license at the point in time the license is granted. The customer can direct the use of and obtain substantially all the benefits from the license if, for example, the underlying IP is not significantly affected by the entity’s ongoing activities. Revenue for a right to use license is recognized at a point in time whereas revenue for a right to access to license is recognized overtime. An entity’s determination of whether a license is a right to use versus right to access is based on the classification of its intellectual property underlying the license as either functional or symbolic.
Image of page 10
Repurchase Agreement – A contract in which an entity sells an asset and also promises or has the option (same contract or another contract) to repurchase the asset. Examples: An entity’s obligation to repurchase the asset (Forward) An entity’s right to repurchase the asset (Call option) An entity’s obligation to repurchase the asset at the customer’s request (Put option) Forward or Call Option The customer does not obtain control of the asset. Limited to direct the use of and obtain substantially all of the remaining benefits from the asset though the customer may have the physical possession of the asset. Recognition: If the repurchase price is less than the original selling price of the asset, it shall be recognized in accordance with IFRS 16 Leases , unless it’s part of a sale and leaseback transaction. If it’s part of a sale and leaseback transaction , any consideration received from the customer shall be recognized in accordance with IFRS 9 Financial Liabilities.
Image of page 11
Image of page 12

You've reached the end of your free preview.

Want to read all 17 pages?

  • Summer '20
  • IFRIC, Exo Company, entity’s right

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes