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Judith Webs, formerly a senior manager in the Natwnal Accounting and Auditing Department of Gmnt Thornton, is now a freelance writer on matters d a t e d to accounting and auditing.T , he rules for accounting for software sales have changed again.The AICPA's Accounting Standards Executive Committee (AcSEC) recently issued Statement of Position (SOP) 97-2, "Software Revenue Recognition," which supersedes the provisions of SOP 91-1, "Software Revenue Recognition." SOP 97-2 provides new guidance and clarifies certain provisions of SOP 91-1 while also carrying forward some existing guidance. Like its predecessor, SOP 97-2 applies to all entities that earn revenue from marketing sofkware that is more than incidental to the product. It is effective for transactions for fiscal years beginning after December 15, 1997. Early application is encouraged, but retroactive application is prohibited.AcSEC revisited SOP 91-1 for various reasons. There was diversity in the application ofthe SOPS guidance on significant vendor obligations and the revenue recognition practices for bundled software sales arrangements that include services or upgrade rights and/or more than one sofkware product. In addition, changes in technology since the issuance ofthe SOP, such as the ability to deliver s o h a r e electronically, raised issues related to the timing of delivery. The SEC also had questioned the timing of revenue recognition and the allocation of the total fee to delivered products on multiple product arrangements with different delivery dates. For example, how should revenue be recognized if software products A, B and C, each priced at $30,000, are sold for $90,000 under a single contract. How much revenue should be recognized when products A and B are delivered if product C is not deliverable until a future date? What is the effect on revenue recognition of products A and B if product C is never delivered? CONTRACT ACCOUNTINGThe provisions of ARB 45, "Long-Term Construction-TypeContracts," and SOP 81-1, "Accounting for Performance of Construction-

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