I want to make sure I understand “bifurcation” under EITF 09-3

Kurt Morrow's Profile
Kurt Morrow (Marketing Coordinator, Proformative)
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Kurt Morrow
Title: Marketing Coordinator
Company: Proformative
| Apr 18, 2011

This question was asked by an attendee at a recent Proformative Rev Rec webinar: I want to make sure I understand “bifurcation” under EITF 09-3.  If we sell software, professional services to implement it, and computers to run the software on, we segregate the software and account for it under SOP 97-2, and the Professional Services and hardware under EITF 08-1?

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Jim Brendel's Profile
Hein & Associates LLP
Jim Brendel (Partner, Hein & Associates LLP)
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Jim Brendel
Title: Partner
Company: Hein & Associates LLP
| Apr 22, 2011

I am assuming that the software is not essential to the functionality of the hardware. In that case, the elements would be bifurcated into software deliverables and nonsoftware deliverables. Now your question will be whether the installation services are classfied as a software related element (under SOP 97-2). It is likely that software implementation services would be classifed as a software related element. Thus the software and implementation services would be accounted for under SOP 97-2 and the computer would be scoped out by EITF 09-3.

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