Revenue Recognition: Software Issues

- AICPA

Level: Intermediate
Recommended CPE Credit: 2
Prerequisite: Experience in financial reporting.

Two factors affect whether or not revenue is recognized: is it realized or realizable and has it been earned. The various ways software is sold complicates determining whether or not these two factors have been met in the selling of software and software systems. Statement of Position (SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions, provides guidance on applying GAAP when it comes to recognizing revenue on software transactions. In this course we look at the various forms of delivering software and software systems and how revenue is recognizing for these transactions under SOP 97-2.

Course Highlights

• Criteria for revenue recognition
• Additional software deliverables
• Rights to exchange or return software
• Upgrades/enhancements
• Post-contract customer support
• Post-delivery telephone support at no additional charge
• Contract accounting

Course Objectives

• Understand the criteria for revenue recognition in software arrangements.
• Understand revenue recognition allocation when software arrangements contain multiple elements.
• Understand how rights to exchange or return software affects revenue recognition.
• Understand post-contract customer support and the allocation of fees to PCS.

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