Judgment Case $6-6($Static$)$ Performance obligation; licensing $[$LO$6-5,6-7]$

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Assume that Pfizer, a large research$-$based pharmaceutical company, enters into a contract with a start$-$up biotechnology company called HealthPro and promises to

Grant HealthPro the exclusive rights to use Pfizer$$s Technology A for the life of its patent. The license gives HealthPro the exclusive right to market, distribute, and manufacture Drug B as developed using Technology A$.$ Pfizer views the patent as functional intellectual property.

Assign four full$-$time equivalent employees to perform research and development services for HealthPro in a specially designated Pfizer lab facility. The primary objective of these services is to receive regulatory approval to market and distribute Drug B using Technology A$.$

HealthPro is required to use Pfizer$$s lab to perform the research and development services necessary to develop Drug B using Technology A$,$ because the expertise related to Technology A is proprietary to Pfizer and not available elsewhere.

Judgment Case $6-6($Static$)$ Performance obligation; licensing $($Part $1)$

Are the license and R&D development services separate performance obligations?

Multiple Choice

Yes

No