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Construction-Type and Certain Production-Type Contracts AICPA Statement of Position 97-2, Software Revenue Recognition



1. The ultimate objective of attributing arrangement consideration is to determine when the arrangement consideration should be recognized as revenue. As set forth in Concepts Statement 5, paragraph 83, "recognition involves consideration of two factors, (a) being realized or realizable and (b) being earned, with sometimes one and sometimes Copyright © 2010, Financial Accounting Standards Board Not for redistribution Page 1the other being the more important consideration. " Generally, revenue is considered both realizable and earned when each one of the following four conditions is met: a. Persuasive evidence of an arrangement exists. b. The arrangement fee is fixed or determinable. c. Delivery or performance has occurred. d. Collectibility is reasonably assured. 2. The issue of when and if a vendor will receive additional arrangement consideration that is not considered initially fixed upon consummation of the arrangement (for example, arrangement consideration contingent upon achievement of a specified event)

Year: 2008
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