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Does EITF 09-3 apply to 00-21 transactions (outside of 97-2)?

Dan Jebens's Profile

Are transactions like SAAS that are accounted for under EITF 00-21 rather than 97-2 affected by 09-3? For example, in a multi-element arrangement involving hardware, subscription (SAAS), and professional service accounted for 00-21 using residual method we normally recognize the hardware as shipped, the subscription over the term of the subscription, and the PS as performed. The SAAS portion has subscriptions requiring no hardware and other subscriptions that run on a handheld scanner. Since we basically rarely sell the hardware devices separately 9-3 seems to want to group the hardware with the subscription (maybe this only applies to 97-2 transactions)?


Topic Expert
Jim Brendel
Title: Partner
Company: Hein & Associates LLP
(Partner, Hein & Associates LLP) |

Hi Dan,
09-3 only pulls certain multiple deliverable transactions that were previously scoped in to SOP 97-2, out of 97-2. So if you were already applying EITF 00-21 to these transactions, EITF 09-3 will have no effect.
However, EITF 08-1 will supercede EITF 00-21 (if you are calendar year end company it will first apply 1/1/11). Based on your description, it looks like the biggest change for you will be that the residual method is no longer allowed. If you do not have VSOE, you will be using Third Party Evidence, or Estimated Selling Price.

Dan Jebens
Title: CFO
Company: ToolWatch Corp
(CFO, ToolWatch Corp) |

I knew the residual method was gone. The concern I had was whether 09-3 would cause my scanner hardware to be grouped with my scanner subscription (SAAS piece) into the same deliverable element for all my SAAS transactions. It looks like it doesn't which is good.

I still have an occasional rare transaction under 97-2 that is is similar to Case J in 09-3 (985-605-55-228) with a couple differences. I'll see you at the seminar next week and that will probably clear it up.

Thanks Jim!!!


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