Capitalization of software development costs

CFA Level II
#1

I dont see the curriculum mentioning USGAAP and IFRS separately so can I assume they are the same in either case?

#2

Historically, it’s been largely associated with US GAAP, bu t yeah i think u right- no deltas here…

#3

GAAP make a distinction in treating software related costs (both R and D) based on the purpose of the software:

  • software developed for sale: expense R, capitalise D once technological feasibility has been established;
  • software developed for own use: capitalise both R and D

IFRS don’t make such distinction:

  • regardless of purpose: expense R, capitalise D once technological feasibility has been established.

Conclusion: GAAP and IFRS agree on the treatment of software related costs if it was developed for sale but not for use. However, if your question concerns D only, then it’s pretty much the same under both set of standards.