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Contents
Introduction ............................................................................................................................... 5
1. Scope................................................................................................................................. 7
1.1 Internal-use software ................................................................................................ 10
1.1.1 Substantive plan to market software externally ......................................................10
1.1.2 Identifying internal-use software ..........................................................................13
1.2 Software to be used in research and development ........................................................ 15
1.3 Software to be sold, leased, or marketed ..................................................................... 16
1.4 Hosting arrangements .............................................................................................. 16
1.4.1 Hosting arrangement as a cloud computing transaction ..........................................17
1.4.2 Hosting arrangement as software as a service transaction ......................................19
1.5 Other costs of technology.......................................................................................... 21
1.5.1 Business process reengineering and technology transformation...............................21
1.5.2 Website development costs ................................................................................21
2. Internal-use software ...........................................................................................................22
2.1 Preliminary project stage........................................................................................... 24
2.2 Application development stage................................................................................... 25
2.2.1 Acquiring a software license for internal use..........................................................29
2.2.2 Multiple elements included in purchase price.........................................................29
2.2.3 Impact of new software development activities on existing software ..........................31
2.3 Post-implementation operation stage .......................................................................... 32
2.3.1 Training and maintenance ..................................................................................32
2.3.2 Upgrades and enhancements .............................................................................33
2.4 Amortization of capitalized internal-use software costs................................................... 37
2.5 Impairment of capitalized internal-use software cost ...................................................... 38
2.5.1 Abandoned or suspended projects.......................................................................39
2.6 Presentation and disclosure....................................................................................... 41
3. Research and development software .....................................................................................42
3.1 Software that is purchased or leased .......................................................................... 42
3.2 Software that is developed internally ........................................................................... 43
3.3 Disclosure............................................................................................................... 44
4. Software to be sold..............................................................................................................45
4.1 Technological feasibility ............................................................................................ 46
4.1.1 A detail program design exists ............................................................................48
4.1.2 A detail program design does not exist .................................................................49
4.1.3 Development issues after technological feasibility is established ..............................50
4.2 Production costs and post-production costs of computer software ................................... 51
4.2.1 Costs of customer support and maintenance ........................................................52
4.2.2 Costs of product enhancements ..........................................................................54
4.3 Purchased software.................................................................................................. 55
4.4 Funded software-development arrangements ............................................................... 57
4.5 Costs of producing inventory...................................................................................... 58
4.6 Amortization of capitalized amounts ............................................................................ 58
4.6.1 Amortization of product enhancements.................................................................61
4.7 Impairment of capitalized amounts.............................................................................. 62
4.8 Presentation and disclosure....................................................................................... 63