This can result because the timing of payments does not always correlate to the timing of goods or services delivered.
A licence establishes a customer’s rights to the intellectual property ofan entity. Licences of intellectual property may include, but are not limitedto, licences of any of the following:(a) software and technology;(b) motion pictures, music and other forms of media and entertainment;(c) franchises; and(d) patents, trademarks and copyrights.An entity’s determination of whether a license is a right to use versusright to access is based on meeting specific criteria relating to whether thecustomer can direct the use of, and obtain substantially all the benefits fromthe license at the point in time the license is granted. The customer candirect 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’songoing activities. Revenue for a right to use license is recognized at a pointin time whereas revenue for a right to access to license is recognizedovertime.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.
DETERMINING THE NATURE OF THE ENTITY’S PROMISESLIDE 1Determining the nature of the entity’s promiseCriteriaa.The entity will undertake activities that significantly affect the intellectual property to which the customers has rights.b.The rights granted by the licensed directly expose the customer to any positive or negative effects of the entity’s activities.c.Those activities do not result in the transfer of a good or a service to the customer as those activities occur.