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Deferred income on performance obligation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Deferred income on performance obligation

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Kim Smith.
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  • August 27, 2018 at 11:44 am #469633
    samymary
    Member
    • Topics: 8
    • Replies: 1
    • ☆

    Hi Sir,

    If I sold a license which lasts for 5 years and no other goods/services were included, can the performance obligation be performed at that point in time and thus there won’t be any deferred income? Or it still has to be deferred for a period of 5 years?

    August 28, 2018 at 8:46 am #469769
    Kim Smith
    Keymaster
    • Topics: 137
    • Replies: 8385
    • ☆☆☆☆☆

    Absolutely! If there is no outstanding performance obligation it MUST be recognised in full!

    (That the user of the licence will amortise it over 5 years is irrelevant to the company that granted the licence.)

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