Industries

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Revenue for the software and SaaS industry

Industry Supplement | November 2016

 

KPMG's insights on industry ASC 606 implementation. With the new revenue recognition standard effective date approaching, KPMG offers insight on the most significant industry issues.

Applicability

  • Company that is in the software or software-as-a-service (SaaS) industry
  • Company that is currently assessing the impact of the new requirements of ASC 606
  • Company that is at an advanced stage of its ASC 606 implementation

Effective dates

Mandatory effective dates and early adoption provisions:

Annual periods:

For public business entities and certain not-for-profit entities the effective date for annual periods is the fiscal years beginning after Dec. 15, 2017.

For all other entities the effective date for annual periods is the fiscal years beginning after Dec. 15, 2018.

Interim periods:

For public business entitites and certain not-for-profit entities the effective date for interim periods is the fiscal years beginning after Dec. 15, 2017.

For all other entities the effective date for interim periods is the fiscal years beginning after Dec. 15, 2019.

Early adoption:

For public business entities and certain not-for-profit entities the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

For all other entites the effective date for early adoption is the fiscal years beginning after Dec. 15, 2016.

Key impacts

  • Whether the customer obtains a software license affects the guidance applied in accounting for the arrangement.
  • Determination of the performance obligations in the contract may accelerate software license revenue recognition.
  • Vendor-specific objective evidence (VSOE) is no longer the only basis for allocating contract revenue.
  • A customer option may be an additional performance obligation. However, distinguishing a contractual option from a usage-based fee will require judgment.
  • Software licenses are subject to the new licensing guidance. If a license is not distinct, companies consider the licensing guidance in applying the general revenue recognition model to the performance obligation that includes the license.
  • The timing of revenue recognition for unspecified software updates or upgrades/enhancements and professsional services will be similar to today.
  • Sales- or usage-based fees promised in exchange for a software license will typically not be subject to the general guidance on variable consideration. However, exceptions may arise if the royalty is also promised in exchange for other goods or services.
  • In most cases, whether multiple contracts are combined for software and SaaS companies will be similar to current US GAAP.
  • There will no longer be a choice to expense commissions as incurred if certain criteria are met.

Download the document:

Revenue for the software and SaaS industry

Download PDF

Explore more

Accounting Research Online

Access our accounting research website for additional resources for your financial reporting needs.

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.

Headline