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Software AG GB 2012, englisch

SOFTWARE AG | ANNUAL REPORT 2012 172 Total revenue Software AG sales revenues primarily consist of revenue from granting software licenses (usually of indef- inite duration, though in certain cases temporary software licenses), maintenance revenue and revenue from services. Revenue from granting temporary and perpetual licenses is only recognized once a legally binding contract exists, any rights to return have expired, the software has been delivered in accordance with the contract, a price has been agreed or can be established, and there is sufficient probability that payment will be made. Revenue from granting temporary licenses is treated in accordance with the specific features of the license. If the transaction resembles a sale, i.e. involves immediate payment, and the other requirements mentioned above are fulfilled, the income is recognized immediately. However, if the transaction resembles a transfer of use, the income is recognized in installments during the period of use. Software licenses are often sold in combination with maintenance and service contracts. In this case, when an agreement involves multiple elements, revenue recognition is based on the individually identifiable elements of the transaction. Accordingly, revenue is attributed to the individual elements on the basis of their respective market values. If reliable market values cannot be determined for all elements, revenue recognition is based on the residual method. Under the residual method, all determinable market values are deducted from the total transaction value. The residual amount is then attributed to the elements for which no reliable market values can be determined, using list prices. Revenue from maintenance business is recognized proportionately over the period of service provision. Revenue resulting from contracts for services, which are invoiced on the basis of hours performed, is rec- ognized in the period in which the services are rendered by SAG entities. Pursuant to IAS 18 in conjunction with IAS 11, revenues and expenses from fixed-price service contracts are recognized in accordance with the percentage-of-completion (POC) method if the revenues can be reliably measured, there is sufficient probability that Software AG will receive the economic benefits from the transaction, and all costs incurred for the transaction and the costs to complete the service can be reli- ably established. The stage of completion of a contract is calculated on the basis of the proportion of contract

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