How are the new software rev rec rules impacting rev rec under EITF 00-3 (software sold in a hosting arrangement)?

Dan Wassel's Profile
Dan Wassel (VP Finance, Hubspan)
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Dan Wassel
Title: VP Finance
Company: Hubspan
| Mar 21, 2011

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?

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Nathaniel Kessler's Profile
Nathaniel Kessler (in-between, in-between)
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Nathaniel Kessler
Title: in-between
Company: in-between
| Jul 5, 2011

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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