Which of the following expenditures related to internally generated intangible assets is most likely to be capitalized, rather than expensed as incurred? Costs related to internally generated computer software after economic feasibility has been demonstrated. — The above is the correct answer HOWEVER I was pretty sure it had to be TECHNOLOGICALLY feasible as well as economically feasible. Or does Economic feasibility encompass technological feasbility Thoughts? thanks
Assets are define as probable future eonomic benefits. A software product could be economically feasible when technological feasibility has already been achieved, not the other way around. It might be technologically feasible, but not economically feasible yet.
i think the same like map
once software is addding revenue to the firm, additional costs done on it can be capitalized. (even maintenance/enhancement - you’d be surprised) However under IFRS - nothing can be capitalized. In US while youare developing software, you have to be sure of 6 things to capitalize your development costs. - that someone will purchase that product - that development is going to prove fruitful and few others i can’t remmeber
Maintenance no, enhancements yes.
map, i remember reading for maintenance as well. book 3, chapter 36.
Maintenance is an expense incurred to keep the asset in working condition, enhancements add value to the asset. An asset is not increasing in value just because it works and serves the purpose it was created for.
map1 Wrote: ------------------------------------------------------- > Maintenance is an expense incurred to keep the > asset in working condition, enhancements add value > to the asset. An asset is not increasing in value > just because it works and serves the purpose it > was created for. An enhancement should be capitalized if its cost is greater than $100,000 and it significantly increases the software’s capabilities. Do not capitalize the software if it simply extends the useful life of the software. Remember, IFRS is more flexible that US GAAP. Also under IFRS is possible to revaluate fixed assets and create a revaluation reserve in the Net worth. This is not allowed under US GAAP