Generally, U.S. GAAP require that both research and development costs be expensed as incurred but require capitalization of certain costs related to software development. (1) Costs incurred to develop a software product for sale are expensed until the product’s technological feasibility is established and are capitalized thereafter. (2) Similarly, companies expense costs related to the development of software for internal use until it is probable that the project will be completed and that the software will be used as intended. Thereafter, development costs are capitalized If we go by these statements, can we say that under US GAAP, all R&D costs are capitalized when a firm develops software for its own use?? Kaplan says this. But I think the capitalization is contingent. And, it is written above that till the criterion for capitalization is met, company shall book expense. For example, Over a 10-month period, RM Co expended $2500pm to develop software for internal use. For the first 3 months, RM Co could not estimate the probable future benefits of the expenditures. Over the remaining 7 months, the expenditures met the capitalization criterion for intangible assets in accordance with IFRS. The software was completed in time and is in use today. What is the amount of expenditure to be capitalized under US GAAP? And one more statement given: The treatment of software development costs under U.S. GAAP is similar to the treatment of all costs of internally developed intangible assets under IFRS. If this is the case, then how can all software development costs for own use be capitalized under US GAAP? It should strictly follow the IFRS criterion. Is not it?