Chapter 1: Scope
- Navigate the applicable technical guidance with an easy-to-use flowchart
- Additional factors to consider when determining if software has become more-than-incidental to a company's product, including the latest views of the SEC Staff
- Determining if a software arrangement includes a lease and the interaction of SOP97-2 with FAS 13
- Further examples covering the following topical areas:
- Embedded software in hardware deliverables
- Enabling software in service provider/hosting arrangements
Chapter 2: Basic Principles
- Implications of side agreements to revenue recognition
- What to consider when evaluating if a concession has been given to a customer
- Implications of 'most-favored nation' price protection clauses
- Further examples covering the following topical areas:
- Electronic forms of delivery
- Implications of product 'beta' releases
- Overcoming the presumption of concessions in extended payment term arrangements
- Acceptance of software linked to the performance of services
Chapter 3: Multiple Element Arrangements
- Inclusion of guidance related to Post Contract Support, discussed in prior Guides in Chapter 5, to better align practical application of VSOE in practice to multiple element arrangements
- Clearer guidelines on establishing VSOE and the application of the Bell Shape Curve Approach and the Stated Renewal Approach
- Implications of updates to maintain compliance with laws
- Considerations for the presentation and disclosure on product and services revenues in the income statement when VSOE of fair value does not exist for recognition purposes
- Further examples covering the following topical areas:
- Revenue recognition when there are multiple undelivered service elements for which VSOE of fair value is not available (the 'combined services' approach)
- Appropriateness of cumulative catch entry when only one element is remaining
- Contingent revenue in a software arrangement
- Extended warranty
- Group VSOE
- Determining the term of implied PCS
- Co-terminous PCS
- PCS renewal rate adjusted for an independently established inflation measure
- Contractual renewal rate used to establish VSOE of fair value for services other than PCS
- Revenue recognition containing SOP 81-1 & SOP 97-2 elements
Chapter 4: Rights to Return or Exchange Software
- Factors to consider in evaluating exchange rights for substitute products not currently available
- Implications of sunset clauses in software arrangements
Chapter 5: Specified upgrades, additional products and other considerations
- Inclusion of guidance related to specified upgrades and enhancements and additional products, discussed in prior Guides in Chapter 3, to highlight and emphasize these elements as a separate topical area
- Expanded guidance on intellectual property infringement indemnifications
- Consideration of undelivered elements to be provided by a third-party vendor
- Further examples covering the following topical areas:
- Required but unspecified upgrade rights
- Sale of software assurance
- Up-front license fee when no further deliverables or obligations exist
Chapter 6: Discounts, Marketing Programs, and Barter Transactions
- What are the implications of discussing and delivering product roadmaps to customers
- Further examples on implications of discounts in software arrangements
Chapter 7: Resellers
Chapter 8: Funded Software Development Arrangements
Chapter 9: Services and Contract Accounting
- Increased discussion of how SOP97-2 interplays with EITF 00-21 with respect to software and non-software elements
- Guidelines for accounting for pre-contract costs
Chapter 10: Hosting Arrangements, including Software-as-a-Service
- Our take on evaluating revenue recognition for the emerging SaaS models, including:
- Determining the applicable scope
- Evaluation of stand-alone value related to professional services delivered with hosted software
- Recognition periods for up-front fees/software licenses
- Determining if an initial SaaS term is substantive
- Factors to consider in evaluating a significant penalty in a hosting arrangement on hosted software
- Expanded discussion on treatment of costs associated with up-front fees deferred in hosted arrangements
- Further examples covering the following topical areas:
- Limited access to software
- Time-based licenses and hosting arrangements
Chapter 11: Tax considerations
- Updates for the latest considerations in federal, state and international taxation
