QUESTION 19 A vendor enters into a contract with a customer for two licences of intellectual property (licences A and B). It is determined that each licence represents a separate performance obligation, which is satisfied at a point in time (the transfer of each of the licences to the customer). The stand-alone selling prices of the licences are $ 1,200 (licence A) and $ 1,500 (licence B). How would you treat it as per IFRS 15? The prices included in the contract are as follows: • Licence A: a fixed amount of $ 1,200, payable 30 days from the transfer of the licence to the customer • Licence B: a royalty payment of 5% of the selling price of the customer’s future sales of products that use licence B. The vendor estimates that the amount of sales-based royalties that it will receive in respect of licence B will be approximately $ 1,500. The vendor then determines the allocation of the transaction price to each of the two licences. It is concluded that the allocation should be as follows: • Licence A: $ 1,200 • Licence B: the variable royalty payment. This allocation is made because both of the following conditions apply: • The variable payment relates solely to the transfer of licence B (the subsequent royalty payments); and • The fixed amount of licence A, and the estimated amount of sales-based royalties for licence B, are equivalent to their stand-alone selling prices. How would you treat the above?