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Pogo grants Toy Manufacturer a 3-year licence to use the "Chhota Bheem" character on toys. Pogo continues to produce the show and undertake marketing that significantly affects the character's appeal. Under Ind AS 115:
ARevenue is recognised at a POINT IN TIME (grant date) because the licence is a finite three-year right
BRevenue is deferred until each toy is actually sold by Toy Manufacturer
CRevenue is recognised only as a sales-based royalty as toy sales occur
DRevenue is recognised OVER TIME (right to access) — Pogo's ongoing activities (production/marketing) significantly affect the IP, and Toy Manufacturer is exposed to the effects
Answer & Solution
Correct answer: D. Revenue is recognised OVER TIME (right to access) — Pogo's ongoing activities (production/marketing) significantly affect the IP, and Toy Manufacturer is exposed to the effects
All three over-time criteria are met: (a) Pogo's continuing production/marketing significantly affects the IP, (b) Toy Manufacturer is directly exposed (the toy's appeal depends on Pogo's success with the show), and (c) the activities don't transfer a separate good/service. Right to access → over time recognition.
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