For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”
Certain software products were accounted for under ASC 605-25 after the adoption of FASB Accounting Standards Update No. 2009-14, Certain Revenue Arrangements That Include Software Elements — a consensus of the FASB Emerging Issues Task Force (codified in ASC 985-605 and based on EITF Issue No. 09-3, “Research and Development Assets Acquired in an Asset Acquisition”). Under ASC 605-25, an entity could use other methods in addition to vendor-specific objective evidence to determine the selling price of a deliverable.
Even when similar products do exist, reliable pricing information may not be available for determining SSPs under a market-based approach.
If B had determined that pricing for its software product is highly variable under ASC 606-10-32-34(c)(1) and that an observable SSP exists for PCS, it would have been reasonable for B to conclude that a residual approach is appropriate. This approach may yield an answer similar to the one resulting from the value relationship approach described above. The use of a residual approach will be discussed in a subsequent publication.