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    Question

    TechServe sells a perpetual software license bundled

    with significant customization and 2 years of PCS (post-contract support). Customization is complex and significantly modifies the base software to integrate with the customer’s ERP. The license key is delivered at contract inception; customization spans 5 months; PCS covers updates and hotline. How many performance obligations (POs) most likely exist?
    A One PO (integrated solution: license + customization + PCS) Correct Answer Incorrect Answer
    B Two POs (license + [customization+PCS]) Correct Answer Incorrect Answer
    C Two POs (integrated [license+customization] + PCS) Correct Answer Incorrect Answer
    D Three POs (license, customization, PCS) Correct Answer Incorrect Answer
    E One PO if customization > 4 months; else three POs Correct Answer Incorrect Answer

    Solution

    License and significant customization are highly interdependent and produce a combined output; they are typically a single, integrated PO. PCS (stand-ready updates/support) is distinct and capable of being separately benefited, hence a separate PO.

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