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?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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