Academic journal article Journal of Accountancy

Internal-Use Software Statement Issued

Academic journal article Journal of Accountancy

Internal-Use Software Statement Issued

Article excerpt

Accounting practices for the costs of software used internally have been diverse, but a new SOP from AcSEC brings consistency to this multibillion dollar niche. Accounting for the Costs of Computer Software Developed or Obtained for Internal Use requires that many costs to develop or obtain internal-use software be capitalized. The statement also helps clarify what is, and is not, internal-use software and retains an appendix from the ED listing examples.

According to Daniel J. Noll, technical manager, AICPA accounting standards, AcSEC made two key changes to the statement after the exposure period. (For more background, see "AcSEC Software Proposal to Have Major Effect," JofA, Feb.97, page 11, and "Internal-Use Computer Software: The Fixed Asset of the Information Age," JofA, Mar. 97, page 14.) First, the effective date was pushed back a year to fiscal years beginning after December 15, 1998, to give entities more time to implement the new requirements. "Second, we widened the scope to account for data conversion costs, which the ED did not address," said Noll. The statement generally requires these costs to be expensed as incurred. …

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