ISMChapter08.docVIP

chapter 8 OPERATING ACTIVITIES Solutions to Questions, Exercises, and Problems, and Teaching Notes to Cases Delayed Revenue Recognition. The software firm allocates the bundle purchase price to the multiple elements in the bundle based on their relative fair values. When the software is delivered to the customer (date of sale), its proportion of fair value is recognized as revenue. The proportion of fair value assigned to upgrades is reported as a liability (unearned or deferred revenues). As upgrades are delivered over the two-year period, the liability is removed and revenue is rec