Accounting Memo
TO:
Audit Committee
FROM:
Technical Accounting
RE:
CloudScale SaaS — ASC 606
Issue

Whether the CloudScale SaaS arrangement contains a single combined obligation or multiple distinct obligations under ASC 606.

Analysis

The arrangement contains a single obligation two distinct obligations under ASC 606-10-25-21. Implementation services are capable of being distinct from the subscription.

Subscription revenue should be recognized ratably over 36 months per the input method, consistent with the transfer of control.

Conclusion

Contract liability adjusted from $12.4M $14.1M.

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