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If a promise to grant a license is distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the entity's intellectual property.

If a promise to grant a license is distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the entity's intellectual property.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Under franchise in accounting. Number 2 only.

1. The current PFRSS do not address the accounting for revenues from franchise contracts. 2. If a promise to grant a license is distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the entity's intellectual property. 3. If the intellectual property to which the customer has rights does not change over the license period, the nature of the entity's promise to transfer the license is most likely a "right to access." 4. If the nature of an entity's promise to transfer a license is a "right to use," revenue shall be recognized at a point in time. 5. According to PFRS 15, revenue is measured at the fair value of the consideration received or receivable in the contract.
Transcribed Image Text:1. The current PFRSS do not address the accounting for revenues from franchise contracts. 2. If a promise to grant a license is distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the entity's intellectual property. 3. If the intellectual property to which the customer has rights does not change over the license period, the nature of the entity's promise to transfer the license is most likely a "right to access." 4. If the nature of an entity's promise to transfer a license is a "right to use," revenue shall be recognized at a point in time. 5. According to PFRS 15, revenue is measured at the fair value of the consideration received or receivable in the contract.
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