Autodesk 2014 Annual Report Download - page 143

2013 Annual Report
2014 Form 10-K 69
Revenue Recognition
Autodesk recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have
been rendered, the price is fixed or determinable, and collection is probable.
For multiple element arrangements containing only software and software-related elements, Autodesk allocates the sales
price among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements based
on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged when an element is sold
separately or a price set by management with the relevant authority. If Autodesk does not have VSOE of an undelivered
element, revenue recognition is deferred on the entire sales arrangement until all elements for which Autodesk does not have
VSOE are delivered. If Autodesk does not have VSOE for undelivered maintenance or services, the revenue for the
arrangement is recognized over the longest contractual service period in the arrangement. Revenue recognition for significant
lines of business is discussed further below.
For multiple elements arrangements involving non-software elements, including cloud subscription services, our revenue
recognition policy is based upon the accounting guidance contained in ASC 605, Revenue Recognition. For these
arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of
elements as a whole and to the non-software elements. We then further allocate consideration within the software group to the
respective elements within that group using the residual method as described above. Autodesk exercises judgment and uses
estimates in connection with the determination of the amount of revenue to be recognized in each accounting period.
Autodesk’s assessment of likelihood of collection is also a critical element in determining the timing of revenue
recognition. If collection is not probable, the revenue will be deferred until the earlier of when collection is deemed probable or
cash is received.
License and other revenue are comprised of two components: (1) all forms of product license revenue and (2) other
revenue.
(1) All Forms of Product License Revenue
Product license revenue includes: software license revenue from the sale of new seat licenses and upgrades and
product revenue for Creative Finishing.
(2) Other Revenue
Other revenue includes revenue from consulting, training, Autodesk Developers Network and Creative
Finishing customer support, and is recognized over time, as the services are performed.
Our Subscription revenue consists of two components: maintenance revenue for our software products and revenue for
our cloud service offerings, including Autodesk 360. Our maintenance program provides our commercial and educational
customers of perpetual products with a cost effective and predictable budgetary option to obtain the productivity benefits of our
new releases and enhancements when and if released during the term of their contracts. Under our maintenance program,
customers are eligible to receive unspecified upgrades when and if available, downloadable training courses and online support.
We recognize maintenance revenue ratably over the term of the maintenance agreement, which is generally between one and
three years but can occasionally be as long as five years. Revenue for our cloud service offerings is recognized ratably over the
contract term commencing with the date our service is made available to customers and all other revenue recognition criteria
have been satisfied.
Taxes Collected from Customers
Autodesk nets taxes collected from customers against those remitted to government authorities in the consolidated
financial statements. Accordingly, taxes collected from customers are not reported as revenue.
Shipping and Handling Costs
Shipping and handling costs are included in cost of revenue for all periods presented.