Identify Software industry obligations – Customisation

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct? Identify Software industry obligations – Customisation

Scenario B Identify Software industry obligations – Customisation >>>>> See scenario A here, and scenario C here

Information from scenario A: A vendor enters into a contract with a customer to supply a license for a standard ‘off the shelf’ software package, install the software, and to provide unspecified software updates and technical support for a period of two years. The vendor sells the license and technical support separately, and the installation service is routinely provided by a number of other unrelated vendors. The software will remain functional without the software updates and technical support.

New information on scenario B: The vendor’s contract with its customer is the same as in scenario A, except that as part of the installation service the software is to be substantially customised in order to add significant new functionality to enable the software to interface with other software already being used by the customer. The customised installation service can be provided by a number of unrelated vendors. In this case, although the installation service could be provided by other entities, the analysis required by IFRS 15 indicates that within the context of its contract with the customer, the promise to transfer the license is not separately identifiable from the customised installation service. In contrast, and as before, the software updates and technical updates are separately identifiable.

The following distinct goods or services are identified:

  • Software license and customised installation service; Identify Software industry obligations – Customisation
  • Software updates; Identify Software industry obligations – Customisation
  • Technical support. Identify Software industry obligations – Customisation

Identify Software industry obligations – Customisation

Information from scenario A: A vendor enters into a contract with a customer to supply a license for a standard ‘off the shelf’ software package, install the software, and to provide

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