Hi guys, I am new to this forum. Preparing for my CFA Level 1 for the December paper. Now I’m on the chapter for “Long-lived Assets”. Getting confused over IFRS and GAAP recognition for “Intangible Assets Developed Internally” for software development cost. The part that I’m confused about is, for IFRS, software development costs: - will it be capitalized or - will it be expensed first then capitalized after the product’s technological feasibility is established? (or does this only applies to GAAP?) Jolyn
For IFRS: Development costs are capitalized when technical and economic feasibility of a project can be demonstrated in accordance with specific criteria. Some of the stated criteria include: demonstrating technical feasibility, intent to complete the asset, and ability to sell the asset in the future, as well as others. If a company uses the software for internal use it may capitalize the development costs under US GAAP.