Identify Software Industry Obligations - Distinct Service – FAQ | IFRS

Identify Software industry obligations – Distinct service

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

Scenario A                                            >>>>> See scenario B here, and scenario C here

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.

The software is delivered separately from the other goods or services, can be installed by a different third party vendor, and remains functional without the software updates and technical support. Therefore, it is concluded that the customer can benefit from each of the goods or services either on their own or together with other goods or services that are readily available.

In addition, each of the promises to transfer goods or services is separately identifiable; because the installation services does not significantly modify or customise the software, the installation and software are separate outputs promised by the vendor, and not one overall combined output. The following distinct goods or services are identified:

  • Software license;
  • Installation service;
  • Software updates;
  • Technical support.

Identify Software industry obligations – Distinct service Identify Software industry obligations – Distinct service Identify Software industry obligations – Distinct service Identify Software industry obligations – Distinct service 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 Distinct service A vendor enters into a contract contract contract contract contract 

Identify Software industry obligations – Distinct service

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