Support.com 2007 Annual Report Download - page 62

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SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Organization and Summary of Significant Accounting Policies (Continued)
respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.
In December 2007, we recognized a write-down of the intangible assets originally acquired from Core Networks in 2004, in accordance with SFAS No. 142.
See Note 3 to the Consolidated Financial Statements.
Revenue Recognition
We recognize revenue in accordance with the American Institute of Certified Public Accountants' (AICPA) Statement of Position ("SOP") 97-2, Software
Revenue Recognition, as amended by SOP 98-4 and SOP 98-9. License revenue is recognized when all of the following criteria are met:
•
Persuasive evidence of an arrangement exists;
•
Delivery has occurred;
•
Collection is considered probable; and
•
The fees are fixed or determinable.
SupportSoft considers all arrangements with payment terms longer than 90 days, not to be fixed or determinable. If the fee is determined not to be fixed or
determinable, revenue is recognized as payments become due from the customer. Revenue is recognized net of any applicable sales tax.
License revenue is comprised of fees for perpetual and term licenses of our software. Perpetual license revenue is recognized using the residual method, in
compliance with SOP 98-9 for arrangements in which licenses are sold with multiple elements. We allocate revenues on these licenses based upon the fair value
of each undelivered element including undelivered maintenance, consulting and training. The determination of fair value is based upon vendor specific objective
evidence (VSOE). VSOE for maintenance is based upon separate renewals of maintenance from customers. VSOE for consulting or training is based upon
separate sales of these services to customers. Assuming all other revenue recognition criteria are met, the difference between the total arrangement fee and the
amount deferred for each undelivered element is recognized as license revenue.
Term licenses are sold with maintenance for which SupportSoft does not have VSOE to determine fair value for maintenance fees. As a result, license
revenue for term licenses is recognized ratably over the duration of the agreement. License revenue in the accompanying financial statements includes
maintenance for term licenses. We do not allocate maintenance revenue from term licenses to maintenance revenue, as we do not believe there is an allocation
methodology that provides a meaningful and supportable allocation between license and maintenance revenues. Services revenue associated with the term
licenses are recognized ratably over the period associated with the initial payment, generally one year.
We provide resellers with the right to distribute our software to end user customers. Generally, we recognize revenue from our arrangements with resellers
when we receive persuasive evidence that the reseller has actually contracted to license the software to a named end user (sell-through), assuming all other
criteria for revenue recognition have been met. The forms of sell-through acceptable to us include one or more of the following: i) a copy of the agreement or
license between the reseller and the end user, ii) a purchase order from the end user to the reseller, iii) a written communication from
58
Source: SUPPORTSOFT INC, 10-K, March 13, 2008