Faster Revenue Recognition? Not So Fast.
Source: Deloitte LLP
New accounting rules change the way companies will account for multiple element arrangements including certain arrangements that include products that contain both hardware and software. For example, in the past, businesses may have had to defer all revenue from an arrangement until every element of the bundle was delivered, which could take years - especially if the bundle included a long-term service contract. The new rules require companies to establish the selling price for each individual deliverable in the arrangement and then recognize the revenue for individual components as they are delivered (assuming revenue recognition requirements have been satisfied). Most everyone agrees this new approach is a better, more logical way to handle revenue arising from multiple element arrangements.