CERTYNEX IFRS ACADEMY

Canal Boréal acquires the exclusive right to broadcast a television game show format for 6,000,000. The contract provides that the right ends as soon as the cumulative advertising revenue generated by the programme reaches 30,000,000, with no time limit. The right has a nil residual value. Management estimates that this threshold will be reached in about 5 years. During the first year, the programme's advertising revenue amounts to 7,500,000. What amortisation charge should be recognised for the first year?

1,200,000, that is 6,000,000 spread on a straight-line basis over the estimated 5 years, as the presumption prohibits any revenue-based method.

1,500,000, that is 6,000,000 × 7,500,000 / 30,000,000.

7,500,000, that is the advertising revenue for the year.

No charge until the 30,000,000 threshold is reached, since the asset is consumed only at that date.