Although today’s revenue recognition guidance applies the same accounting model across all industries, there are a number of unique considerations when accounting for software and software-as-a-service (SaaS) arrangements. As you delve into these arrangements, we've developed a series of Q&As to help you navigate common issues that arise. From determining contract term and assessing whether a software license is distinct to accounting for variable fees in a SaaS arrangement and much more, we hope to demystify the accounting and reporting implications.
Following are the eight issue areas addressed in the Q&A guide for software and SaaS entities:
Identifying the contract
Identifying the performance obligations
Determining the transaction price
Allocating transaction price
- Recognizing revenue
Contract modifications
Principal versus agent considerations
Costs to obtain a contract
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