Article Abstract:
Collaboration between information technology (IT) firms has become an acceptable strategy in the 1990s. Even firms which would once have tried to develop products on their own or grow through acquisitions are now busy forging alliances with other IT firms. One reason for this trend is that the cost of software development has become quite heavy, making it necessary for firms to divide costs with partners. Another reason is that systems development has become much more complex, making it difficult for individual firms to go it alone. The trend towards IT collaboration has also been made easier by the increasing standardization of UNIX and PC hardware, the widespread acceptance of Microsoft Windows as the industry standard and the growing use of object oriented programming. Examples of successful IT alliances in the UK are the partnerships between Coda and Science Systems, and between Sage and Curat Lex.
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Article Abstract:
A survey of the accounting practices of UK software manufacturers conducted by Arthur Andersen reveals that the software industry uses differing accounting treatments that renders meaningful comparisons of companies impossible. The survey reveals that 78% of software companies write off software development costs on the basis of when it is incurred, which depresses profits and understates the firm's capital worth. There are widely differing methods used to record revenues from software sales: 40% record sales on delivery, 30% on acceptance, and 25% on a combination of both. The survey reveals that over 90% of software houses feel that there is a need for guidance from the accounting profession.
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Article Abstract:
The Cedar Group, adopting US Generally Accepted Accounting Principles for revenue recognition, reported an operating loss. The change in accounting methods removes the need for accrued revenue items that arise owing to timing differences between recognition date and the contractual invoice terms.
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