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Technology Alert — Challenges associated with applying the new revenue standard: residual approach to estimating stand-alone selling prices and allocating the transaction price when a value relationship exists

Published on: Jun 12, 2019

This Technology Alert discusses considerations related to the determination of whether and, if so, how an entity that sells a software license, postcontract customer support, and professional services to a customer may use a residual approach under the FASB’s new revenue recognition standard to estimate stand-alone selling prices and allocate the transaction price to the performance obligations when a value relationship exists. The alert is the fourth in a series intended to help technology entities better understand the new guidance, particularly private organizations that are currently adopting the standard’s requirements.


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