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)
  • Sriprasadh Cadambi, KPMG LLP
  • Michael Coleman, PricewaterhouseCoopers LLP
  • Stacy Harrington, Microsoft
  • Stephen Hope, Autodesk
  • Sujit Kankanwadi, Synopsys
  • Kevan Krysler, VMware
  • Gary Merrill, CommVault Systems
  • Craig Miller, Grant Thornton LLP
  • Christina Minasi, BDO LLP
  • Marc Seymer, Adobe
  • Rich Stuart, RSM US LLP
  • Joe Talley, Deloitte LLP
  • Paul Vigil, BMC Software
  • Corey West, Oracle
  • Alison Yara, IBM
Staff Contact: Kim Kushmerick, kim.kushmerick@aicpa-cima.com

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 Software Intellectual Property is Distinct in Cloud Computing Arrangements (i.e., Hosting, Software-as-a-Service and Hybrid Software/SAAS)
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.
Finalized and included in the AICPA Guide Revenue Recognition
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.
Finalized and included the AICPA Guide Revenue Recognition
3 Accounting for a customer’s option to purchase or use additional copies of software
This implementation issue addresses considerations for determining whether a customer’s right to acquire additional users/copies of a delivered software product constitute an option to acquire additional software rights or variable consideration related to software rights already purchased.
Out for exposure until November 1, 2017
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.
Finalized and included in the AICPA Guide Revenue Recognition
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.
Finalized and included in the AICPA Guide Revenue Recognition
6
Estimating the Standalone Selling Price
This implementation issue addresses when it is appropriate to use the residual approach in estimating standalone selling price of a software license.
Finalized and included in the AICPA Guide Revenue Recognition
7
Determine the transaction price: assessing significance of financing component
This implementation issue discusses considerations for determining whether a significant financing component exists.
Finalized to be included in a future edition of the AICPA Guide Revenue Recognition
8
Transfer of control of a software license
This implementation issue discusses factors that should be considered to determine when control transfers from a seller to a buyer for a software license that a vendor has determined to be distinct.
Out for exposure until August 1, 2017
11 Estimating standalone selling price including the use of a range to evidence SSP
This implementation issue addresses certain considerations in estimating the standalone selling price (SSP) for distinct performance obligations (PO’s) in software arrangements.
Out for exposure until August 1, 2017
13 Determining whether other goods and services in the arrangement are separate performance obligations
This implementation issue provides considerations for determining whether other goods and services within a software arrangement are separate performance obligations.
Submitted to AICPA RRWG


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 kim.kushmerick@aicpa-cima.com by the dates noted below:

Issue # Comment Due Date
14-3 - Whether Customer’s Right to Acquire Additional Users/Copies of a Delivered Software Product Constitute an Option to Acquire Additional Software Rights or Variable Consideration November 1, 2017
14-7 - Significant Financing Components in Software Arrangements April 3, 2017
14-8 - Transfer of Control for Distinct Software Licenses August 1, 2017
14-11 - Considerations in Estimating Standalone Selling Prices August 1, 2017





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