Revenue Recognition Software Maintenance Agreements

-April 11, 2021-

Revenue Recognition Software Maintenance Agreements

Mike Burroughs

It is likely that many other issues and questions will arise within the software industry as companies move to the new revenue recognition standard. This article serves as a reference point for your research on some of the priority topics. Similar industry discussions and resources are available on RevenueHub`s website for all major sectors. Company A is a saaS company that sells ERP software licenses. Company A typically provides regular updates for software that contains bug fixes and general improvements. You found that updates are a separate part of the contract supply, because each component (software plus future updates) adds value to the customer. In accordance with the new revenue recognition policies, Company A would likely decide to identify revenues assigned to the maturity license at the time of the software transfer to the customer, while revenue from updates would be detected over time. Ii. General design issues under the new SOPA. Multiple-Element-AnsatzA, which is discussed in Part 1 of this article, is one of the fundamental differences between the new SOP and the previous guidelines for recording software revenue ("SOP 91-1") the removal of the "important remaining to provide" test of SOP 91-1 and the implementation of the multi-element approach by the new SOP. This approach, with several elements, includes the following primary steps: Professor Wilks is an EY accounting professor and former director of the BYU School of Accounting. From 2006 to 2008, he worked as a fellow academic at the Financial Accounting Standards Board in Norwalk, Connecticut. It was there that he led the development of the new international sales recognition standard, a standard released in May 2014.

From 2008 to 2009, Professor Wilks also worked as a scientific consultant for the International Accounting Standards Board in London, England. He has also worked as a technical advisor to the Connor Group, which provides companies preparing for an IPO, technical audits, IPO services and SEC reporting guidelines. In January 2014, he was appointed by the Financial Accounting Foundation to the Financial Accounting Standards Advisory Council. I. Introduction Part 2 of this article focuses on the practical steps a lawyer should take in preparing software agreements and related policies and procedures that must be reviewed by a software company for the new software revenue recognition policies, SOP 97-2 (the "New SOP").

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