MSFT Internet Explorer vs. NSCP Navigator Message Board

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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator

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To: Daniel Schuh who wrote (3287)	11/23/1996 2:15:00 AM
From: Winston Chang	of 24154

Software revenue recognition policies do follow defined standards. Essentially, licensing fees may be recognized immediately when there are no other obligations. When there are obligations for continuing support, and these obligations are non-trivial, and the revenue for such obligations (such as service or customer support) cannot be segregated or priced separately, revenues for the entire software product is deferred and recognized over the period in which these services are provided (usually straight-line unless the company can prove some other time pattern is more representative). As far as software costs are concerned, all related costs (like salaries) are expensed as incurred until "technological feasibility" has been established. Once this point has occurred, the costs are capitalized and amortized over the expected useful life of the software. In practice, it's a matter of judgment and estimates made by the Company's management, and the auditors will agree to these estimates so long as they are reasonable and consistent. Hope this helps, Winston

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