Analyse SSs accounting policy governing revenue recognition of software Align in the current year. SS enters into
Question:
Analyse SS’s accounting policy governing revenue recognition of software Align in the current year.
SS enters into arrangements with customers that can include various combinations of software and services. Among its product portfolios, one arrangement makes significant revenue contribution in 2019 and 2018. Align is a project management software targeted at small and medium businesses. SS’s usual arrangement with customers not only includes the software license, but also includes customizing the software and integrating it into the customers’ information systems. In addition, customers purchasing the software license will receive software assurance service over a 5-year period at no additional cost. The assurance service guarantees proper functioning of the software within the customers’ information system. The company currently recognize the revenue from Align by amortizing it over the 5-year assurance period.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones