VSOE for a Group of Elements

A vendor may not sell separately all of the individual elements included in a multiple-element arrangement. However, the vendor may sell separately two or more of the software products included in the multiple-element arrangement. We believe that a software vendor can establish VSOE of fair value for a group of software products for purposes of allocating revenue to elements included ina multiple-element arrangement. Upon allocation of revenue to a group of software products, the revenue recognition provisions of SOP 97-2 should be applied as if the group were a single element (e.g., the delivery criterion cannot be met until all specified software products in the group have been delivered). Also, the vendor may use the residual method for purposes of allocating the arrangement consideration if VSOE of fair value exists for all of the undelivered elements.