What is Software development costs?
In short
Costs of software to be sold are research and development expense until technological feasibility is reached, then capitalized until the product is available for release. For internal-use software, costs in the application development stage are capitalized.
Key takeaways
- Capitalized costs of software to be sold are amortized at the greater of the revenue-ratio amount and the straight-line amount.
- Internal-use software: preliminary-project and post-implementation costs, including training, are expensed.
- A 2025 update replaces the internal-use stages with a probable-to-complete threshold, effective for years beginning after December 15, 2027.
Where it's tested
FAR: Intangible Assets & Goodwill — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Software development costs incurred AFTER technological feasibility is established but before general release are: