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    This post addresses revenue recognition for software co.

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    Software companies often bundle upgrades and technical support services with their software. Assume that a software company promises to automatically deliver updates for 2 years when a customer purchases software costing $100. Describe how the software company should determine the amount of revenue to recognize at the date of sale and subsequent to the date of sale.

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    Solution Preview

    If the software company can determine the portion of the revenue that can be attributed directly to the software, and the portion that can be directly attributed to the upgrade services, they ...

    Solution Summary

    The solution provides a detailed discussion explaining how software companies should recognize revenue based on their sales that include upgrades and technical support services with their software.