Software Entities Revenue Recognition Task Force 


AICPA Revenue Recognition Task Forces are charged with developing revenue recognition implementation issues that will provide helpful hints and illustrative examples for how to apply the new Revenue Recognition Standard.

Task Force Members:

  • Nancy Salisbury, Ernst & Young LLP (Chair)
  • Aaron Anderson, PayPal
  • Sriprasadh Cadambi, KPMG LLP
  • Michael Coleman, PricewaterhouseCoopers LLP
  • Eric Domagalski, Symantec
  • Stacy Harrington, Microsoft
  • Stephen Hope, Autodesk
  • Sujit Kankanwadi, Synopsys
  • Wendy Kim, BDO LLP
  • Kevan Krysler, VMware
  • Neil Manna, CA Technologies
  • Gary Merrill, CommVault Systems
  • Craig Miller, Grant Thornton LLP
  • Marc Seymer, Adobe
  • Rich Stuart, McGladrey LLP
  • Joe Talley, Deloitte LLP
  • Paul Vigil, BMC Software
  • Corey West, Oracle
  • Alison Yara, IBM
Staff Contact: George Fritz, revrecstaff@aicpa.org

IDENTIFIED REVENUE RECOGNITION IMPLEMENTATION ISSUES

Below is a list of potential revenue recognition implementation issues identified by the Software Entities Revenue Recognition Task Force. The list will be updated as the task force continues it discussions. Full revenue recognition implementation issues will be posted below for informal comments after review by the AICPA Financial Reporting Executive Committee (FinREC).

The Task Force has removed and/or addressed selected implementation issues included in the original plan. They have retained the original issue #s for the table below. - See more at: http://edit.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/RevenueRecognition/Pages/RRTF-Aerospace.aspx#sthash.SbxjAbYn.dpuf
The Task Force has removed and/or addressed selected implementation issues included in the original plan. They have retained the original issue #s for the table below. - See more at: http://edit.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/RevenueRecognition/Pages/RRTF-Aerospace.aspx#sthash.SbxjAbYn.dpuf
The Task Force has removed and/or addressed selected implementation issues included in the original plan. They have retained the original issue #s for the table below. - See more at: http://edit.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/RevenueRecognition/Pages/RRTF-Aerospace.aspx#sthash.SbxjAbYn.dpuf

The Task Force has removed and/or addressed selected implementation issues included in the original plan. They have retained the original issue #s for the table below.

Issue # Description of Implementation Issue Status
1 Determining whether a license in a hosting, SaaS and hybrid-cloud arrangements are distinct from other goods and services in the arrangement
This implementation issue discusses considerations in determining when software intellectual property (“IP”) is considered highly interdependent or interrelated with other services in an arrangement, and hence not considered distinct within the context of the contract.
Submitted to FinREC - July 2016
2 Identification and satisfaction of performance obligations
This implementation issue discusses considerations in determining whether components of PCS, as well as licenses, are separate performance obligations when applying the guidance in FASB ASC 606.
Out for Exposure until September 1, 2016
3 Accounting for a customer’s option to purchase or use additional copies of software
4a
Defining and Identifying Potential Price Concessions 
This implementation issue discusses sources of information a vendor may use to evaluate, identify and estimate the value of implied price concessions; how the portfolio approach may be used in this estimation; and how contracts with extended payment terms impact this estimation.
Submitted to FinREC - July 2016
4b
Estimating the Standalone Selling Price of Options that are Determined to be Performance Obligations
This implementation issue provides illustrative examples of the methods in ASC 606-10-55-44 and 55-45 to account for options within an arrangement that are determined to be performance obligations because they provide a material right to the customer.
Submitted to FinREC - July 2016
5
Accounting for month-to-month software license with a renewal option
6
Determine the transaction price: use of the residual method
This implementation issue addresses when it is appropriate to use the residual approach in estimating standalone selling price of a software license.
Submitted to FinREC - July 2016
7
Determine the transaction price: assessing significance of financing component
This implementation issue discusses considerations for determining whether a significant financing component exists.
Submitted to AICPA RRWG
8
Transfer of control of a software license
10 Disclosure: levels of disclosure of disaggregated revenue
11 Estimating standalone selling price including the use of a range to evidence SSP
12 Identify the contract: master service arrangements and purchase orders
13 Determining whether other goods and services (e.g., application management, integration and installation services) in the arrangement are separate performance obligations


FEEDBACK REQUESTED

Draft Revenue Recognition Implementation Issues included for informal comment, when available, will be listed below.

Respondents should submit any comments including the implementation issue number to kkushmerick@aicpa.org by the dates noted below:

Issue # Comment Due Date
14-2 - Determining Whether Components of Postcontract Customer Support (“PCS”) are Separate Performance Obligations Distinct from One Another, and the Associated Pattern in which an Entity Satisfies Each Performance Obligation September 1, 2016





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