be deferred until installation and on-site testing are successfully completed?
No. The staff would not object to revenue recognition for the equipment upon delivery (presuming all other revenue recognition criteria, including those appropriate for a multiple-element arrangement, have been met) if the seller demonstrates that, at the time of delivery, the equipment already meets all of the criteria and specifications in the customer-specific acceptance provisions. This may be demonstrated if conditions under which the customer intends to operate the equipment are replicated in pre-shipment testing unless the performance of the equipment, once installed and operated at the customer’s facility, may reasonably be different from that tested prior to shipment. Determining whether the delivered equipment meets all of a product’s criteria and specifications is a matter of judgment that must be evaluated in light of the facts and circumstances of a particular transaction. Consultation with knowledgeable project managers or engineers may be necessary in such circumstances.
