Fasb Codification
1. The inventory at your company consists of computer software that the company has developed and is selling. You capitalized (rather than expensed) the cost of duplicating the software, the instruction manuals, and training material that are sold with the software.
985 Software: 330 Inventory: 25 Recognition
25-1 The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis.
The cost of duplicating the software, instruction manuals, and training materials that are sold with the software is capitalized and amortized to current and future periods. Any costs incurred beyond the Research and Development stage can be capitalized when it is pertaining to the development of software that is to be sold, leased, or otherwise marketed to third parties. Standard 985-330-25-1 applies to these costs as the FASB ASC defines the Product Masters as "a completed version, ready for copying, of the computer software product, the documentation, and the training materials that are to be sold, leased, or otherwise marketed". The company has established technological feasibility for the software product and no longer has to charge to the R&D expense the costs incurred in creating the product. Technical feasibility is established when the company has the capability, in terms of software, hardware, personnel and expertise, for the completion of the project. The materials have obviously surpassed the Research and Development stage if they have been prepared for the duplication stage. All R&D costs are expensed until technological feasibility; and it not until this point that some future development costs can be capitalized. There are no clear guidelines on this matter, but the Financial Accounting Standards Board did issue Interpretation No. 6, Applicability of Statement No. 2 to
985 Software: 330 Inventory: 25 Recognition
25-1 The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis.
The cost of duplicating the software, instruction manuals, and training materials that are sold with the software is capitalized and amortized to current and future periods. Any costs incurred beyond the Research and Development stage can be capitalized when it is pertaining to the development of software that is to be sold, leased, or otherwise marketed to third parties. Standard 985-330-25-1 applies to these costs as the FASB ASC defines the Product Masters as "a completed version, ready for copying, of the computer software product, the documentation, and the training materials that are to be sold, leased, or otherwise marketed". The company has established technological feasibility for the software product and no longer has to charge to the R&D expense the costs incurred in creating the product. Technical feasibility is established when the company has the capability, in terms of software, hardware, personnel and expertise, for the completion of the project. The materials have obviously surpassed the Research and Development stage if they have been prepared for the duplication stage. All R&D costs are expensed until technological feasibility; and it not until this point that some future development costs can be capitalized. There are no clear guidelines on this matter, but the Financial Accounting Standards Board did issue Interpretation No. 6, Applicability of Statement No. 2 to