* 1 Myles Intro: Facts:
* 1 Issues: Multiple Element Arrangement
* How should revenue be allocated to each deliverable? * What sales price should be allocated to each deliverable? * How are deliverables defined?
* 25-4 “A vendor shall evaluate all deliverables in an arrangement to determine whether they represent separate units of accounting. That evaluation shall be performed at the inception of the arrangement and as each item in the arrangement is delivered.” * 25-5 “In an arrangement with multiple deliverables, the delivered item or items shall be considered a separate unit of accounting if both of the following criteria are met:
* a. The delivered item or items have value to the customer on a standalone basis. The item or items have value on a standalone basis if they are sold separately by any vendor or the customer could resell the delivered item(s) on a standalone basis. In the context of a customer's ability to resell the delivered item(s), this criterion does not require the existence of an observable market for the deliverable(s). * b. Subparagraph superseded by Accounting Standards Update No. 2009-13 * c. If the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the vendor * 25-6 “A delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be combined with the other applicable undelivered item(s) within the arrangement. The allocation of arrangement consideration and the recognition of revenue then shall be determined for those combined deliverables as a single unit of accounting.”
* warranty, update machines
* 2 Sandra Alternatives:
* Company’s selling price to a different customer
* A different company’s selling price of the...