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Accounting for the Costs of Computer Software Developed

See the attached file.

Research the FASB Codification for Accounting for the costs of computer software developed or obtained for internal use using CheckPoint and FASB.org.

Answer the following questions:
1. What are the characteristics that define internal-use software?
2. Provide three examples of when computer software is for internal use.
3. What are the three stages of computer software development and provide
an activity which takes place in each stage?
4. What criteria must be met in order for capitalization of costs to begin?
5. What is one example of authorization?
6. Under what circumstances shall impairment be recognized?
7. When shall amortization begin and what method is used to amortize.
internal-use software?
8. If, after the development of internal-use software is completed, an entity
decides to market the software, how is it recorded?

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1. What are the characteristics that define internal-use software? (350-40-05-2)
Internal-use software has both of the following characteristics:
a. The software is acquired, internally developed, or modified solely, to meet the entity's internal needs.
b. During the software's development or modification, no substantive plan exists or is being developed to market the software externally.

2. Provide three examples of when computer software is for internal use.(350-40-05-6, paragraph 350-40-55-1 through 55-2)
a. A manufacturing entity purchases robots and customizes the software that the robots use to function. The robots are used in a manufacturing process that results in finished goods.
b. An entity develops software that helps it improve its cash management, which may allow the entity to earn more revenue.

c. An entity purchases software related to the installation of an online system used to keep membership data.
3. What are the three stages of computer software development and provide an activity which takes places in each stage? (350-40-05-7, paragraph 350-40-55-3)
a. Preliminary project stage-Conceptual formulation of alternatives
b. Application development ...

Solution Summary

The solution discusses accounting for the costs of computer software developed.

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