What does VSOE stand for?
Accountants and auditors require so-called vendor-specific objective evidence (VSOE) of the fair value of the contract’s components so that it can properly determine the value of individual items and recognize partial revenue before the entire contract is fulfilled.
What is VSOE compliance?
In accounting practices, vendor-specific objective evidence (VSOE) is a method of revenue recognition allowed by US GAAP that enables companies to recognize revenue on specific items on a multi-item sale based on evidence specific to a company that the product has been delivered.
What is PCS in revenue recognition?
Regardless of the licensing, Post Contract Services (PCS) such as maintenance and updates are typically lumped together with the portion of the contract fee allocated to PCS and recognized monthly over the period that the services are supplied. Simple enough to understand. Things will change under ASC 606.
How does ASC 606 affect software companies?
Under ASC 606, the foundation for allocating contract revenues to contract components is no longer vendor-specific objective evidence of fair value (VSOE). Software companies will no longer need to establish VSOE in order to recognize revenue separately for different components of a contract.
What is realization of revenue?
The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. Thus, revenue can only be recognized after it has been earned.
What does PCS mean in software?
Process Control Solution (software) PCS.
What does PCS mean in SaaS?
Private Cloud Subscription
PCS stands for Private Cloud Subscription. PCP stands for Private Cloud Perpetual. SaaS stands for Software as a Service.
What is realization and example?
Realization is defined as the moment of understanding something, or when something planned finally happens. An example of a realization is when a person sitting in a boring meeting understands that they need a new job. An example of a realization is when you achieve your goal of wanting to run in a marathon.