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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.
Allocation is the process used to determine the amount recognized for each item in a bundle. The total VSOE amount allocated always equals the sales amount of the transaction bundle (or the item group if you are using item groups for VSOE). The VSOE allocation amount for a sale can be calculated automatically by checking the Auto-calculate VSOE ...
Understanding VSOE Prices and Allocation summarizes how VSOE works in NetSuite. Setting Up the VSOE Feature describes how to enable the VSOE feature, set its preferences, and set up VSOE on an item record. Creating VSOE Bundles describes how to predefine the bundles that you sell as item groups or to designate an entire transaction as a bundle.
Vendor-specific objective evidence. In accounting practices, vendor-specific objective evidence (VSOE) is a method of revenue recognition allowed by US GAAP that enables companies to recognize revenue on specific items on a multi-item sale based on evidence specific to a company that the product has been delivered.
- 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.
You can click the Update VSOE button on the Accounting subtab to update the vendor-specific objective evidence (VSOE) allocation amount and delivery status on a transaction. VSOE prices can be changed only on transactions you have not yet billed. After billing, you can only change the delivery status. For example, an order that you have not yet ...
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What is VSOE allocation?
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What is VSOE revenue recognition?
The transaction is set to auto-calculate the VSOE allocation AND any item in the bundle does not have a VSOE price (except when using the residual method) If any of these conditions are met, NetSuite cannot determine the VSOE allocation amount and does not allow the transaction to be saved.
