AICPA Statements of Position (SOPs), available full-text at the links below from the University of .. , Accounting for the costs of computer software developed or obtained for internal use full-text, March 4. , Accounting for costs of. As with some other accounting standards, the conclusions in a recent AICPA AcSEC SOP In March , AcSEC issued SOP , Accounting for the Costs of. SOP is a Statement of Position, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, issued by the American Institute of.

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Accounting for interfund transfers of state and local government units full-text. Significant cost overruns d. Accounting practices in the broadcasting industry full-text.

SOP — Accounting for the Costs of Computer Software

In some cases, the purchase price includes multiple elements, such as training for the software, maintenance fees for routine maintenance work to be performed by the third party, data conversion costs, reengincering costs, and rights to future upgrades and enhancements. From Wikipedia, the free encyclopedia. New software zicpa activities should trigger consideration of remaining useful lives of software that is to be replaced.

AcSEC considered whether this SOP should require entities to meet some technological feasibility threshold before they could capitalize costs of internal-use computer software.

AICPA Statements of Position – Wikipedia

For purposes of this SOP, computer software is ready for its intended use after all substantial testing is completed. Disclosure of certain significant risks and uncertainties aicpw. Invite vendors to perform demonstrations of how their software will fulfill an entity’s needs. Thus, they believe that readers of financial statements can be misled by the initial capitalization aipa subsequent writeoff of those costs. Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Guidance on Applying Statement No. AcSEC believes that the presence of a substantive plan to market software externally before or during software development indicates an intent to sell, lease, or otherwise market software, which requires accounting prescribed by FASB Statement No.

In order to give its business customers access, my client incurs relatively minor software development expenses to customize a web-based interface between the customer’s software and its database.

So the company is an online directory or peoplesearch data base or criminal background checking company. Valerie, thank you for the comment and suggestion dop follow the fee for access business model accounting path. For example, should an entity make or buy the software? Initial application of this SOP should be as of the beginning of the fiscal year in which the SOP is first adopted that is, if the SOP is adopted prior to the effective date and during an interim period other than the first interim period, all prior interim periods of that fiscal year should be restated.


A significant change occurs in the extent or manner in which the software is used or is expected to be used. If maintenance is combined with specified upgrades and enhancements in a single contract, the cost should be allocated between the elements as discussed in paragraph 33 and the maintenance costs should be expensed over the contract period. Internal costs incurred for maintenance aipca be expensed as incurred.

AcSEC believes that it would be desirable for the costs of internally developed computer software whether developed by employees or per diem independent contractors that are capitalized to be accounted for no differently than the capitalized costs aaicpa purchased software whether the software is obtained retail or developed by outside consultants for a flat fee or price. Accounting and financial reporting by governmental units; amendment to AICPA Industry audit 988-1, Audits of state and local governmental units full-text.

AcSEC believes that it is impractical to allocate costs between internal-use software and software to be marketed. If the answer to any of these questions is no, that may indicate that the software is part of a product or process and is included in the scope of Statement No. Accounting for asserted and unasserted medical malpractice claims of health care providers and related issues full-text. They believe that, like the costs of computer software to be sold, soop, or otherwise marketed, the costs of so; computer software aicpx within 98-11 scope sp paragraph 9 i of FASB Statement No.

AcSEC also believes that development risks associated with creating internal-use computer software are conceptually no different from development risks associated with creating other assets such as high-tech automated plants. That inventory model includes an implicit marketability test, a notion that is not applicable to this SOP. Reporting practices concerning hospital-related organizations; 9-81 1, My client keeps the database accurate and current within clearly defined parameters.

Application of the deposit, installment, and cost recovery methods in accounting for sales of real estate full-text. Reporting of related entities by not-for-profit organizations; amendment to AICPA industry audit guides, Audits of voluntary health and welfare organizations and Audits of colleges and universities, AICPA audit and accounting guide, Audits of certain nonprofit organizations, and SOPAccounting principles and reporting practices for certain nonprofit organizations full-text.

However, external costs related to maintenance, unspecified upgrades and enhancements, and costs under agreements that combine the costs of maintenance and unspecified upgrades and enhancements should be recognized in expense over the contract period on a straight-line basis unless another systematic and rational basis is more representative of the services received.


I cannot remember what the number is currently under ASC, but it reads the same. Internal costs incurred for upgrades and enhancements should be expensed or capitalized in accordance with paragraphs Some proponents of capitalization of internal-use software observe that paragraph 24 of APB Opinion 17, Intangible Assets, requires that entities capitalize acquired intangible assets.

Therefore, AcSEC believes that data conversion costs, as discussed in paragraph 22, should be expensed as they are incurred. Accounting by so; or distributors of films full-text. Probable does not require absolute certainty. Accounting by agricultural producers and agricultural cooperatives full-text. A substantive plan to market software externally could include the selection of a marketing channel or channels with identified promotional, delivery, billing, and support activities.

Accountants’ services on prospective financial statements for internal use only and partial presentations full-text. This page was last edited on 29 Julyat Once the capitalization criteria of the SOP have been met, external direct costs of materials and services consumed in developing or obtaining internal-use computer software; payroll and payroll-related costs for employees who are directly associated with and who devote time aicps the internal-use computer software project to the ssop of the time spent directly on the project ; and interest costs incurred when developing computer software for internal use should be capitalized.

Financial reporting by entities in reorganization under the bankruptcy code full-text. This SOP provides guidance on 9-1 for computer software that consists of more than one component or module.

SOP 98-1 — Accounting for the Costs of Computer Software

Should the software run on a mainframe or a client server system? Costs of computer software that is “sold, leased, or otherwise marketed as a separate product or as part of a product or process” are within the scope of FASB Statement No.

Since the appendixes often are important to understanding SOPs, readers are advised to obtain complete copies. Audits of stock life insurance companies full-text. Management, with the relevant authority, implicitly or explicitly authorizes and commits to funding a computer software project and it is probable n6 that the project will be completed and the software will be used to perform the function intended.

However, AcSEC believes similar changes in direction also occur for long-livedasset projects.

Internal-use computer software is not expected to provide substantive service potential.