CERTYNEX IFRS ACADEMY

Norvane signs a contract with a foreign manufacturer for the exclusive distribution of its products in three countries for five years, in return for an upfront fee. The contract expressly prohibits Norvane from transferring this right to another entity, and no market would allow it to be sold. The financial controller concludes that the right is not identifiable. What should be concluded?

He is right: a non-transferable right is never separable, and therefore never identifiable.

He is right, because the right becomes identifiable only when the five-year period ends.

He is wrong, but only because Norvane could renegotiate the non-transfer clause.

He is wrong: the right arises from a contract, which is enough to make it identifiable.