Revenue Recognition for Software. i2 technologies has settled with the SEC over revenue recognition issues.

Over a nearly five-year period ending in 2002, the company allegedly misstated about $1 billion of license revenues, including over $125 million it should never have recognized.

Had the Dallas-based developer and marketer of enterprise supply chain software provided accurate financial reports during these periods, it would have disclosed increasingly negative results, the commission asserted.

According to the SEC, i2 favored up-front recognition of software license revenue, which is accepted under generally accepted accounting principals (GAAP). However, i2 knew or should have known that immediate recognition of revenue was unsuitable for a number of i2's software licenses because they required long and involved implementation and customer customization, the commission added.