A client in the software industry comes to you for an explanation of how to recognize revenue from the sale of software.The company does not provide any services related to the software, but has agreements to deliver software.
Required:
Explain how the presence or absence of significant production, modification, or customization affects revenue recognition for agreements to deliver software.

If a company has an agreement to deliver software that requires significant production, modification, or customization of software, it uses contract accounting (e.g., percentage-of-completion method)for the agreement.If a company has an agreement to deliver software that does not require significant production, modification, or customization of software, it recognizes revenue when (a)persuasive evidence of an agreement exists, (b)delivery has occurred, (c)the seller's fee is fixed or determinable, and (d)collectibility is probable.