This question was asked by an attendee at a recent Proformative Rev Rec
How do you treat EITF 08-1 revenue recognition on unrelated items in the same sales order?
Answers
I think that the answer to this question is the arrangement appears to fall under software revenue recognition (SOP 97-2) and not EITF 08-1 because it has software and does not have a tangible product element. This would appear to be a multiple element software transaction.
There could also be an impact by SOP 98.1 that discusses delivery / services impact on software revenue recognition - although the statement in the question says they are services not related to the software acceptance.
Credit to revenue recognition expert Jeffrey Werner for this response.
I think I would look first to SOP 97-2 and whether the services would be considered a "software related item". If they are, I agree that this would be considered a multiple element software transaction. However, your question indicates that the services have standalone value not associated with the software. That would indicate that those services may not be a software related item. In that case, I do think it would be appropriate to first segregate the services under EITF 08-1. The software sale would be governed by SOP 97-2.
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