How does IFRS 15 distinguish between a 'right to access' and a 'right to use' for IP licensing revenue?

This is a nuanced IFRS 15 topic that has significant implications for how and when licensing revenue is recognized. The distinction depends on the nature of the IP being licensed and the company's ongoing obligations.

Right to Access (Over Time Recognition):

The customer has a right to access the entity's IP as it exists throughout the license period. This applies when all three criteria are met:

1. The contract requires (or the customer reasonably expects) the entity to undertake activities that significantly affect the IP
2. The customer is directly exposed to the positive or negative effects of those activities
3. Those activities do not result in a separate good or service being transferred

Examples:

• A franchise license where the franchisor continuously updates its brand, recipes, and marketing (e.g., Elmsworth Coffee Co. licensing its brand to operators)
• A sports team licensing its brand name — the team's ongoing performance affects the brand value
• A software company licensing a platform that it continuously updates and maintains

Right to Use (Point-in-Time Recognition):

The customer has a right to use the IP as it exists at a specific point in time. Revenue is recognized when the license is transferred (typically when the customer can begin using it).

Examples:

• A pharmaceutical company licensing a completed drug patent to a manufacturer
• A music publisher licensing a completed song catalog
• A software company selling a perpetual license for a finished product with no update obligations

Worked Example:

Horizon Media licenses its proprietary fitness training brand to Apex Gym for 5 years at $200,000 per year. Horizon commits to:

• Continuously developing new training programs under the brand
• National advertising campaigns that enhance brand recognition
• Updating certification requirements annually

Analysis: Horizon's ongoing activities (program development, advertising, certification updates) significantly affect the value of the IP that Apex is accessing. All three criteria are met.

Result: Right to access → recognize $200,000 revenue per year over the 5-year term.

Contrast: If Horizon simply sold Apex a one-time training manual and brand package with no ongoing obligations, it would be a right to use → recognize the full fee when the manual is delivered.

Financial statement implications:

Exam tip: The CFA Level II exam typically presents a scenario and asks whether revenue should be recognized over time or at a point in time. Focus on whether the licensor has ongoing obligations that significantly affect the IP. If yes, it is over time. If the IP is static and complete, it is point in time.

For more IFRS 15 licensing scenarios, explore our CFA Level II question bank.