Changes in Revenue Recognition for Software-Dependent Hardware
Changes that impact revenue recognition now allow companies to delay revenue reporting if their hardware is reliant upon software for functionality elements.
As David Lewandoski, audit partner at Grant Thorton explains, the revenue can now be recognized once the hardware and software have both been released.
While this isn’t creating new revenue, explains Lewandoski, it does change the bookkeeping process (immediate versus future revenue).
Companies that rely on software to provide functionality to their hardware can now use this to more accurately manage profits. For more information on this accounting change, watch the video from OpenView Labs featuring Lewandoski.
Hint: You have to look beyond the website or pricing page.
Gross margin documents the business your product is building, yet it’s often tucked away in a financial update while a medley of product metrics enjoy the spotlight.