Delivery of a software product that has not yet been through the vendor's normal quality assurance process
A customer may wish to license a newer version of a vendor's software product that has yet been made available for general release. In some cases, the vendor may deliver a limited-release (e.g. beta) version of a product that is in the latter stages of development to be used by the customer until development of the product is made available for general release. In such arrangements, there is typically an implied (or contractual) obligation for the vendor to deliver the final product when the quality assurance process is complete and the software is made available for general release. When such an implied or contractual obligation exists, the delivery criterion has not been met when the cusotmer receives the limited-release version of the product. As a result, revenue may not be recognized upon delivery of the limited-release version of the software product, even if the vendor has received payment, because the vendor has not yet delivered the final product that the customer ordered. Revenue should be recognized when final product is delivered, provided that all other revenue recognition criteria are met.
Delivery of multiuple copies vs delivery of multiple licenses:
- In delivery of multiple copies, duplication is incidental to the arrangement and the delivery criterion is met upon th edelivery of the first copy of product master.
- In delivery of multiple licenses, the licensing fee is a function of the number of copies delivered to, made by, or deployed by the user or reseller. Delivery occurs and revenue should be recognized as the copies ar emade by the user or sold by the reseller.
Site Licenses - SOP 97 defines a site license as a license that permits a customer to use either specified or unlimited number of copies of a software product either throughout the company or at a specified location. Therefore, duplication of the software is considered to be incidental to the arrangement and delivery is considered to have occurred upon delivery of the first copy or product master.
