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You can use the Vendor-Specific Objective Evidence (VSOE) feature to ensure that your company properly recognizes revenue for products and services sold as part of a bundle. VSOE revenue recognition is commonly used by companies that sell software products and services in multiple-element bundles. VSOE focuses on the fair market value of an ...
The Example 1 bundle has known VSOE prices for all items and the VSOE allocation amount is equal to the VSOE price. Because all items are marked delivered, revenue recognition schedules are created for all items. The Example 2 bundle has known VSOE prices for all items and the VSOE allocation is equal to the VSOE price.
Complete the following tasks to set up the VSOE feature:: Enabling the VSOE Feature. Setting Up VSOE Preferences. Setting Up VSOE on an Item Record. When you have set up the VSOE feature, you can define VSOE bundles. See Creating VSOE Bundles.
- Vendor Specific Objective Evidence
- What Is VSOE Accounting?
- Related FAQs
When it comes to ERP software, most vendors like Sage and Acumatica sell multiple items bundled together in a contract – such as software, training, and support – that span a period of time. In accounting, this can present a unique challenge when it comes to revenue recognition. That’s why GAAP provides guidance referred to as Vendor Specific Objec...
Introduced in 1997 by the AICPA, vendor specific objective evidence (VSOE) provides special accounting rules for how companies that license, sell, or lease software must recognize revenue. In particular, it governs how companies must recognize revenue from so-called “multiple-element arrangements” – bundles of software products and related services...
NOTE: this article is for informational purposes only. It is not qualified accounting guidance. Please consult your CPA for help with your specific accounting requirements.
VSOE focuses on the fair market value of an item sold individually, as opposed to the assigned sales value of the item sold as part of a multiple-element bundle. You can use the VSOE feature to determine VSOE prices of items and defer the recognition of this revenue.
You can use the VSOE feature to determine VSOE prices of items and defer the recognition of this revenue. The VSOE feature is intended for use by United States companies to maintain GAAP compliance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 97-2 (SOP 97-2) and SOP 98-9 (the residual method).
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Understanding VSOE Prices and Allocation. The items that your company sells as part of a bundle can have a vendor-specific objective evidence (VSOE) price, based on its fair market value, in addition to an invoice price as part of the bundle. VSOE prices are assigned to items that are part of the bundle and that are dependent on each other.
