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NEC Gives Up over Revenue Recognition

Company says it simply cannot figure out U.S. GAAP revenue-recognition rules, and will stop trying.

Tim Reason, CFO.com | US
September 21, 2007

Practical stand

Many times acctg of multiple elements in one contract becomes difficult and calculating the VSOE is theory.The accounting bodies who regulate the U.S.GAAP should come out with a more detailed practical approach or an alternate solution.

Posted by Srikant Narayanan | September 24, 2007 11:18 pm

glad

I'm glad to see this rebellion against rules which make no sense to those that they are applied against.

Posted by Roland Cycan | September 24, 2007 01:01 pm

Recognition - Revenue and Regulation

What we need to recognize is that this is a classic example of unproductive people interfering with productive business.

The entire Software Industry is operating under a cloud regarding Revenue Recognition. Nobody knows for certain what might send a CEO to prison. These are the people with the vision in which the free world invests. Getting into a prosecutial habit of criminalizing them, especially through the trap of vague regulation, would seem to be against the American public interest.

An easy way out of this horrendous mess is to put recognition of software/maintenance sales on a cash basis. When you get the money, it's revenue. Done.

Of course, simple and logical are anathema to the people who feed their kids by inventing self-serving turgidity like SOP97-2's VSOE. That it frustrates an important industry is no concern to them.

Sure, there have been revenue abuses in the past, and all sorts of software executives have been prosecuted. Does this mean the United States Government should put its full weight and power into dissolving the software industry through over-regulation?

That would be ill-advised. First, this blitheringly unthought strategy is ultimately doomed. NEC can list anywhere. So can anyone, even companies that are currently headquartered in the US.

Second, no corporation would volunteer to delist if they could just get away from this unholy mess. Congress should take up the issue.

Posted by George Brown | September 21, 2007 08:19 pm

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