Concessions

Any change to an arrangement that reduces the total revenue to be recognized, extends the payment terms, increases the customer's rights, or increases the seller's obligations consitutes a concession. Examples:

• extending payment due dates in arrangement
• decreasing total payments due
• accepting returns beyond terms
• discounted or free PCS
• discounted or free upgrades.

Refunds

Revenue allocated to an element is not considered collectible and is subject to forfeiture, refund or other concessions. Therefore management must intend not to accept returns or grant concessions. If a vendor has a historical pattern of making refunds or granting concessions on delivered elements not required under the original provisions of its arrangements due to non-delivery of the elements, no other lvidence is persuasive enough to reach a conclusion that revenue in current arrangements with similar elements is not subject to forteiture.

Acceptance

License revenue should not be recognized if uncertanty exists about customer acceptance. Often the case when a customer acceptance clause is based on customer or arrangement specific criteria that cannot be evaluated until the software is installed and operating in the customer's environment.