Our customer does not have the right nor the feasibility to take possession of the software so we treat it as a service contract with the revenue recognized over the life of the contract. Does this change under the new software rev rec rules?
How are the new software rev rec rules impacting rev rec under EITF 00-3 (software sold in a hosting arrangement)?
Answers
As someone fairly familiar with the offerings of cloud computing and software as a service, I felt the abstract did more to confuse the issue than to clarify it. (Read it here: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175820910954&blobheader=application%2Fpdf)
My guess is that ultimately this isn't going to change the revenue recognition process you have in place. What does it even mean to "take possession" of the software? I expect we'll see more clarity on this soon.
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