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Unformatted text preview: the hardware. Accounting for software that is essential to the functionality of the hardware is
accounted for as specified below in "Multiple Deliverables". Dell has established vendor specific objective evidence ("VSOE") on a
limited basis for certain software offerings. When Dell has not established VSOE to support a separation of the software license and PCS
elements, the revenue and related costs are generally recognized over the term of the agreement.
As more fully explained in Recently Issued and Adopted Accounting Pronouncements below, effective with the first quarter of Fiscal
2011, certain Dell storage products are no longer included in the scope of the software revenue recognition guidance. Prior to the new
guidance, Dell established fair value for PCS for these products based on VSOE and used the residual method to allocate revenue to the
delivered elements. Under the new guidance, the revenue for what was previously deemed PCS is now considered part of a multiple
deliverable arrangement. As such, any discount is allocated to all elements based on the relative selling price of both delivered and
undelivered elements. The impact of applying this new guidance was not material to Dell's Consolidated Financial Statements for Fiscal
2011 or 2010.
Dell's multiple deliverable arrangements generally include hardware products that are sold with essential software or services such as
extended warranty, installation, maintenance, and other services contracts. The nature and terms of these multiple deliverable
arrangements will vary based on the customized needs of Dell's customers. Each of these deliverables in an arrangement typically
represents a separate unit of accounting. Dell's service contracts may include a combination of services arrangements including
deployment, asset recovery, recycling, IT outsourcing, consulting, applications development, applications maintenance, and business
process services. As more fully explained in Recently Issued and Adopted Accounting Pronouncements below, effective with the first
quarter of Fiscal 2011, Dell allocated revenue to all deliverables based...
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This document was uploaded on 02/22/2014 for the course ACCT 6330 at University of Texas at Dallas, Richardson.
- Spring '11