IFRS 15 Royalty income intellectual property provides application guidance on the recognition of revenue for sales-based or usage-based royalties on licences of intellectual property, which differs from the requirements that apply to other revenue from licences.
IFRS 15 B63 requires that royalties received in exchange for licences of intellectual property are recognised at the later of when:
(a) The subsequent sale or usage occurs.
(b) The performance obligation to which some or all of the sales-based or usage-based royalty has been allocated is satisfied (or partially satisfied).
Royalties revenue recognition
That is, an entity recognises the royalties as revenue for such arrangements when (or as) the customer’s subsequent sales or usage occurs, unless that pattern of recognition accelerates … Read more