FASB Discusses Software Costs

At its September 20, 2023, meeting, the FASB discussed its project on the accounting for and disclosure of software costs, including recent stakeholder feedback the Board has received regarding recognizing such costs. Specific topics addressed included (1) the starting threshold for capitalizing software costs, (2) defining the unit of account, (3) the ending threshold for capitalization, and (4) the definition of subsequent activities.

As a next step, the Board has directed its staff to “(1) perform targeted investor outreach and (2) explore whether targeted improvements could be made to existing software costs guidance to reflect how that guidance should be applied in an agile software development environment.”

For more information, see the tentative Board decisions on the FASB’s Web site.