Academic journal article Journal of Accountancy

AcSEC Software Proposal to Have Major Effect

Academic journal article Journal of Accountancy

AcSEC Software Proposal to Have Major Effect

Article excerpt

The American Institute of CPAs accounting standards executive committee issued an exposure draft of a Statement of Position, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The ED proposes that certain costs be capitalized as long-lived assets, although many companies have been expensing these costs.

"Companies would have to set up cost accumulation mechanisms they might not have," Philip D. Ameen, chairman of the AcSEC internal-use software costs task force, told the journal. "Larger companies likely have such mechanisms in place for inventories or capital projects and would only have to make modifications to adapt these to software." Ameen said this was the case at General Electric, where he is vice-president and comptroller. A smaller company, however, might have to take a close look at cost accumulation methods.

Ameen said the exposure draft might not receive the volume of comment letters it deserves. People just don't realize how widespread the implications are," he said. "The entire underlying concept of this statement is controversial." The ED touches on ongoing controversies over soft assets, and the Financial Accounting Standards Board has expressed some concern about the long-lived asset classification proposed in the draft. …

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