significant production, modification, or customization

After ASU 2014-09 gutted nearly all of its content, ASC 605-985 survives only to address recognizing a provision for losses on contracts to deliver software or a software system (alone or with other products and services) that require significant production, modification, or customization of software. It expressly provides no revenue recognition guidance; revenue for such arrangements is accounted for under Topic 606, with the loss provision guidance in Subtopic 605-35. If it becomes probable that the transaction price allocated to an unsatisfied or partially unsatisfied performance obligation will produce a loss, that loss is recognized under Topic 450.

ASC 985-10 is the Overall subtopic of the Software Topic, which sets the scope umbrella for the industry-specific software guidance (costs of software to be sold, leased, or marketed; inventory; intangibles—goodwill and other; provision for losses; cost of sales and services; and research and development). The Topic provides only incremental industry-specific guidance—entities within its scope must also apply all other applicable GAAP (985-10-15-1). It applies to all entities and to computer software to be sold, leased, or otherwise marketed as a separate product or as part of a product or process (985-10-15-2 through 15-3).